<p>Hi, we just filled out the fafsa (have not filed 2012 taxes yet). I have read (here) and on finaid.org, that for line 87, you should input box 5 from the W2. (This is the income of the parent plus the money put aside for 401k).<br>
The instruction says something like " you may find this information from box 7,12+18 of form 1040". So, when I finally do file 2012 taxes, and then link the fafsa application with
to my filed taxes using the irs retrieval tool, will the tool simply input values from box 7,12+18 for line 87 ?
Is there anyway to override input from the irs retrieval tool for question 87 ?<br>
If you are able to override it, will that cause your fafsa application to be flagged and then
it will need to go through the verification process ?
Any guidance would be appreciated. This is the first time we have filled out the fafsa!
Thanks in advance.</p>
<p>Box 1 on your W2 is taxable income, that’s what ends up on line 7
Box 5 is income paid by your employer subject to medicare. In most cases this would be equal to box 1 plus any deductions for 401k or similar amounts excluded from taxable income.</p>
<p>However, that is not the same as the sum of income from lines 7,12, and 18.
Line 12 is business income (from schedule C, if you are a sole proprietor, for instance).
Line 18 is farm income (which is reported separately from regular business income, on schedule F) and would not include any deductions from retirement accounts.</p>
<p>We filled our out a couple of days ago. I think the question you are referring to is about parent’s income - they want box 1 plus box 8 (which is empty for most people - this is tips for which the employer did not deduct social security).</p>
<p>Are you filling out FAFSA for a spring or summer term, or for Fall 2013? We were asked on a separate line about deductions for 401K and the like in the untaxed income section. It doesn’t sound like we were filling out the same online form.</p>
<p>Is there anyway to override input from the irs retrieval tool for question 87 ?
If you are able to override it, will that cause your fafsa application to be flagged and then
it will need to go through the verification process ?</p>
<hr>
<p>Yes, changing the information after you linked to the IRS retrieval tool will very likely cause you to be selected for verification. You should not change the information - the info that is pulled in from the link is what is supposed to be there.</p>
<p>I’m confused, though. Question 87 asks about the mother’s income from work. Maybe you are looking at info for a prior year? Here is the link to the FAFSA pdf for 13-14: <a href=“http://www.edpubs.gov/document/en1162p.pdf[/url]”>http://www.edpubs.gov/document/en1162p.pdf</a>.</p>
<p>Just want to point out - any time you do the IRS retrieval and then change the info, there is a flag that the finaid office sees indicating you did that. 401k rollovers show up as income, though, and need adjustment — in that case, it is a good idea to contact the financial aid office to ask them if they want to make the adjustment themselves using the paper copy of your tax return.</p>
<p>I re-read the original post, and I realized what you were referring to … yes, there is info out there that says box 5 is more truly reflective of earnings. BUT … you are expected to use what FAFSA tells you to use, not what some “think” you should use … and that IRS retrieval uses what is supposed to be used, so leave it be.</p>
<p>Thank you ctscoutsmom and kelsmom. I meant to say line 86 of the fafsa, not 87. And, I read this article, which made me think we should use w2 box 5 to fill ou the info.
[Fear</a> the FAFSA? Here are five mistakes to avoid when applying for college financial aid | OregonLive.com](<a href=“http://www.oregonlive.com/finance/index.ssf/2012/02/fear_the_fafsa_here_are_five_m.html]Fear”>Fear the FAFSA? Here are five mistakes to avoid when applying for college financial aid - oregonlive.com)</p>
<p>And this article about income earned from work.
[FinAid</a> | Financial Aid Applications | Income Earned from Work](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid)</p>
<p>I am not quite sure what to do. Just use the IRS retrieval tool and let it go at that ?
Would you recommend talking to a fin aid office at one of the schools?
Thanks.</p>
<p>Your help link refers to the 2009-2010 FAFSA. Both 1040 and FAFSA lines change over the years, which may make finaid.org info confusing. Have you tried the help links/buttons on the FAFSA form itself?</p>
<p>The directions on what to enter here are maddeningly vague. So, here’s what Bishop says you should do. Look at your W-2. Enter the amount from Box 5. That’s the income you received before 401(k) contributions are removed. </p>
<p>“Every blessed FAFSA form I review has that wrong,” Bishop said. </p>
<hr>
<p>This is from the Oregon article. Ms. Bishop is a CPA. The FAFSA directions are not vague in the least. They tell you exactly what lines to use. The reason every FAFSA Ms. Bishop reviews is “wrong” is because SHE is wrong. FAFSA regulations are not governed by what CPA’s think makes sense. The directions on the FAFSA are supposed to be followed as written.</p>
<p>This discussion of what actually should be entered on lines 86-87 (Income earned from work) is interesting and confusing.</p>
<p>The current 2013 edition for the 2012 filing year of “Paying for College Without Going Broke” by Kalman Chany also agree with Ms. Bishop’s view. The book specifically says to include line 7, 12, 18 as well as to add back tax-deferred contributions. The explanation given is that the colleges specifically want to determine what social security tax you paid and whether you qualify for the employment allowance (page 165).</p>
<p>I guess we will go with the practice of just not changing any fields that are automatically verified with the Data Retrieval Tool. We know our 1040 is correct so as long as the lines match up and auto-fill, we’re good with that. Don’t schools only care about the updated FAFSA after you’ve filed your tax returns anyway? That way they’re not preparing packages on numbers that may change later. It would be double the work for them.</p>
<p>I guess we will go with the practice of just not changing any fields that are automatically verified with the Data Retrieval Tool.</p>
<hr>
<p>That is the best course of action. And schools often have to prepare packages with the estimated taxes, due to timing issues. If the “real” info changes the EFC, packages may have to be adjusted … and in many (probably most) finaid offices, it won’t happen immediately. However, if your “real” info has been received before the finaid office packages students, that is what will be used … the most recent info is used.</p>
<p>Actually … it just dawned on me that the income from work is NOT transferred from the IRS to the FAFSA. That is something YOU put in. There are obviously varying ideas about what it should be, and the directions are vague in that they state that “This information may be on the W-2 forms, or on IRS Form 1040—lines 7 + 12 + 18 + Box 14 (Code A) of IRS Schedule K-1 (Form 1065); on 1040A—line 7; or on 1040EZ—line 1.” What I can tell you, though, is that schools often (and I won’t say “always,” because I do not know this to be true) will have a policy that uses IRS Form 1040—lines 7 + 12 + 18 + Box 14 (Code A) of IRS Schedule K-1 (Form 1065); on 1040A—line 7; or on 1040EZ—line 1. This means that the school may change the numbers during verification, resulting in a higher EFC … and they are allowed to do so because that is their policy for interpreting the regulations. </p>
<p>So … clear as mud?</p>