<p>(1) Block 1 of the W-2 lists "wages, tpis, other compensation." Block 3 lists "social security wages." Which is your "income?" I asked at a couple of the schools to which my daughter is applying and received different responses -- and I wasn't convinced that anyone I spoke with was really sure. Between my husband and myself, there is a $7K difference in the amounts for our parental income, so it might make a difference in the EFC.</p>
<p>(2) What if I put the lesser of the amounts (namely, the amount in Block 1) and it is the wrong amount (i.e., I should have put in the amont in Block 3)?</p>
<p>(3) Do colleges take into consideration income that is put into pension and retirement funds? Or ( in the college's view) is this money still available for EFC?</p>
<p>You use block 1. Block 2 is the amount for which you are assessed for social security. That may be quite different from your true compensation as some income just does not count for social security--say, if your income is over the SS maximum for the given year, for instance. Also benefits escape SS taxation. FAFSA and PROFILE want it ALL. And for the year that is being asked on the FAFSA there is a worksheet that shows you that you must put back in the income put into pension and retirement plans. That is specifically addressed in the instructions. I believe Princeton Review has a book that does explain line by line what precisely goes on each line explaining the rationale to some degree.</p>
<p>Sorry, I did mean Box 1. Box 3 is the amount for which you are assessed for social security. That amount could be less than Box 1 for the reasons I gave. It could be more than Box 1 which seems to be your situation because you are contributing to some tax deferred plan and that money is not taxed for social security. Well, you still report Box 1 because you will add back those contributions for that year. If you put down Box 3, you would be double reporting those contributions when you add them back in later. Hope that makes things a little bit clearer.</p>