<p>Hi - finally got our completed 1040 form back to work with. When I was filling in the FAFSA, for the question 'How much Income Tax did your Parent pay in 2010?' it says to use the info from line 55 of the 1040 form.</p>
<p>In our case that figure is zero.</p>
<p>However, H. did pay quite a bit in Self Employment Tax, which appears on line 56. I called the FAFSA help line and they said I had to use the info from line 55 only. Seems a bit unfair -- will this affect our FA?</p>
<p>Thanks</p>
<p>Self employment tax is social security, isn’t it? It’s not income tax. Are you saying that you didn’t have any income tax but you had only self employment tax?</p>
<p>Yes - this year. I know H. pays estimated tax quarterly, and I’m now wondering if maybe his accountant forgot to include it? All it shows is self-employment tax on the next line. I don’t think that’s Soc. Security(?), but honestly, I have no idea. I wish I had last year’s 1040 to compare. We are separated, so I end up doing the F.A. applications piecemeal as he gets the papers and figures to me, and of course it’s now the last minute…</p>
<p>I believe you misunderstood or the help line person misinformed you about self employment tax. If FASFA form (and I dont have one in front of me) says put what is on line 55 on form 1040, that is what you should put. Self employment tax is not income tax even though a self employed person pays it via their annual tax return. What is paid either by estimated taxes or withholding taxes over the year is also of no consequence when filling out a FASFA form.</p>
<p>Self-employment tax is not reportable, just as Social Security tax with-holding isn’t reportable by people who are not self-employed. Just hits us harder since we pay pay twice as much.</p>
<p>My church pays me what would be the employer’s share of social security tax (half my self-employment tax that’s due). I have to report that amount as taxable income… though I can deduct half my SE tax from my income before paying taxes. It’s a real merry-go-round.</p>
<p>I had the same question – Line 55 is about half of the amount I have to pay the federal government (I am also self-employed). I posted my question in the Financial Aid forum and got some good explanations on why FAFSA wants Line 55 only. You may want to check that forum or repost there if you don’t get sufficient clarification here.</p>
<p>Thank you everyone!
And Classof2015 I will look for that thread - thanks</p>
<p>The self-employment tax and/or FICA is already built into the formula -that’s why you don’t report it. That is, if your husband netted $30K from self employment – then that figure also tells you what his SE tax would have been, because SE/FICA is a flat rate up to the point where it cuts off. </p>
<p>But they don’t know without reference to line 55 what you might have paid/owed in <em>income</em> taxes because they don’t know what deductions and credits you may have to reduce tax liability.</p>
<p>Thank you, calmom.
It’s just confusing because last year I see we DID list an amount for taxes paid, but not this year – even though he now has a higher AGI. I hate this stuff.</p>
<p>Q. If you are separated, why are H’s numbers going on the FAFSA? Is he being deemed the custodial parent, even though you are doing all the paperwork?</p>
<p>No, I am 100% custodial parent. If it were my numbers they were working with S would probably be getting a full ride (I’d write “haha” here, but it’s not even funny).</p>
<p>He actually goes to a school that uses both the FAFSA and CSS Profile, but to simplify the process they are letting returning students renew by just submitting the FAFSA this year. That’s a good point, though, calmom! However, in this case, I’d feel I was cheating if I spun it otherwise.</p>
<p>And also, we are not ‘legally’ separated, although we have lived separately for a couple years now, and will never get back together. We will divorce eventually.</p>
<p>OK, makes sense if that’s how your college wants you to handle it. </p>
<p>I’d just point out that I don’t think you have to be “legally” separated to be separated for FAFSA purposes:</p>
<p>
</p>
<p>See: [Completing</a> the FAFSA 2010-2011/The Application Questions(59-93)](<a href=“http://studentaid.ed.gov/students/publications/completing_fafsa/2010_2011/ques3-5.html]Completing”>http://studentaid.ed.gov/students/publications/completing_fafsa/2010_2011/ques3-5.html)</p>
<p>So basically – you don’t need a piece of paper from a court – if in your eyes, H has “permanently left the household” then it is the same for FAFSA as if you were divorced. </p>
<p>But if you are just doing this for a school that specifically has informed you they want H’s income & assets considered, and are doing you the favor of letting you guys save the $25 or $50 or whatever CSS is getting these days for the combined parent and NCP reports… then it the FAFSA is probably fine. Actually, one nice thing is that gives you a real number for EFC – as opposed to the ??? I had for 4 years with CSS’s policy of keeping all the stuff XH. put on the form a deep dark secret. My ex is also self employed, so I never had a clue from one year to the next what was going on those forms, or even if he was managing to fill them out right.</p>
<p>Wow, thanks, calmom–
Even if it’s not necessarily FAFSA-only for S2’s school (I will certainly check, though) this information will come in handy when D1 applies to college next year. I had no idea you didn’t need to be <em>legally</em> separated.</p>
<p>And yes, I too have learned a lot about our finances (mostly not good!) by doing the Profile and FAFSA. Ugh.</p>
<p>DH also pays self-employment tax. Last year, we filled out the FAFSA with only what was on line 55, but wrote to the school’s financial aid office that we paid self-employment tax, told them what the amount is, & they adjusted our EFC to take that into account. People who are self-employed pay twice as much for social security & FICA as those who aren’t</p>
<p>Thanks - that’s pretty much what I finally decided to do too. It certainly can’t hurt!</p>
<p>
Yes, but we also get a write-off of 1/2 of our self-employment tax that reduces our AGI – and it is the AGI figure, not net earnings, that goes into the FAFSA.</p>
<p>Actually, FAFSA also wanted to know what DH’s income was & that was from his Sched C, not AGI.</p>
<p>Yes, but the REASON the formula ASKS for earned income is so that they can calculate the amount of FICA or self-employment tax – they use the AGI as the figure they work from for income – but treat taxed vs. untaxed portions of that income differently. </p>
<p>If AGI is LESS than earned income (as it will be for self-employed people who have no other income), then the “income” for FAFSA purposes is the AGI, offset by the FICA amount calculated from the earned income total.</p>
<p>All I know is that when I informed the school that DH was self-employed & we had to pay self-employment tax (and you have to pay 100% of it in extimated taxes even if you eventually get to deduct half of it), they re-adjusted our EFC to take that into account. All they offered us were loans anyway, even though AGI was lower than earned income, so it didn’t really help much. Maybe other schools would’ve handled it differently.</p>