<p>Ok, I just got tax return for 2005. Here is data:
Adjusted Gross Income: 59 000
Taxable Income: 39 000
My father is self-employer (builds/repairs houses). So even though he made 59 000, he spend 20 000 on matetials/cars/workers/etc. FAFSA doesn't ask for taxable, only adjusted. The problem is that my stepdad brought 39 000 in the house, not 59 000. But FAFSA asksa for adjusted. Is it ok to put 39 000 other there? Otherwise our EFC will sky rocket (honestly we are not rich or wealth, I don't feel it). Will FAFSA/Fin. Office punish me for that or they'll understand situation?
Thanks for help</p>
<p>I think you misunderstand how tax returns work (welcome to the club!).</p>
<p>Your dad probably files a schedule C for his business-- that's the form for the self employed where he lists his business income, and his business expenses (materials, workers, office in home, business mileage on the truck, etc). The gross income, minus the expenses results in the net income from his business, and that net amount gets put on the 1040, and contributes to the total income.</p>
<p>Then on top of that, he adds other income in (interest earned, for example), or any work he did as a traditional W-2 employee. These get added up and the result is the "Total income". Total income is higher than "Adjusted Gross Income".</p>
<p>Next-- he gets to deduct stuff-- like half of his self employment tax, perhaps his health insurance premiums, his IRA contributions for the year -- all this reduces the Total Income to a lower amount they call the "Adjusted Gross Income" (in his case, 59K).</p>
<p>THEN-- the tax gods work some more magic-- and further reduce the AGI with some more deductions (mortgage interest, contributions to charity, etc). In his case, he had about 20K of deductions, but none of these were for materials, cars, workers-- they already were deducted on the Schedule C. After these items are deducted from the AGI, we get the Taxable Income (39K). That's the amount he actually pays tax on.</p>
<p>So the AGI (59K) is probably closer to the amount he actually brought in than the lower Taxable income. The AGI is the number that FAFSA uses as a starting point-- and then FAFSA works some more magic on it (and adds in some asset info and other stuff) to come up with the EFC.</p>
<p>If you don't have tons of assets, an AGI of 59K shouldn't give you a very high EFC at all. Use the calculator at FinAid to crunch the numbers.</p>
<p>i suggest calling the FAFSA people for clarification/help..its the safest way to go</p>
<p>BTW can I file realt tax form 2005 after April 15th (cuz we want to talk with his tax person)</p>
<p>2 sblake7 so basically his 59k is the real money he brought home, but we have to tax only 39k because of some "economy magic". Btw his real income (lines 7+12+18 on 1040) is 67k, so I understand now what you mean by "These get added up and the result is the "Total income". Total income is higher than "Adjusted Gross Income"."</p>
<p>Deadline is the 15th to pay taxes. You can file for an extension and file the tax forms later, but the taxes have to be paid now.</p>
<p>I wouldn't recommend extending on a FAFSA filing year. You need to finalize your FAFSA.</p>
<p>The FAFSA instructions make clear which figures, from which lines of the tax form, to use. Once your taxes are done, the FAFSA isn't to difficult to fill out.</p>
<p>Irbis-- exactly. Don't worry needlessly about 59K AGI-- you should end up with an EFC that will get you significant aid from some colleges. (again, assuming you don't have a lot of assets in your name, or that you dad doesn't have tons of $$ stashed away).</p>
<p>yea but my mom is really freaked out by numbers. So basically all we have to do is do everything straight forward (add/subtract lines)? So better to file FAFSA before April 15th or around that date?
Oh btw my EFC is 7500 now, not 445 (used calculator), we don't have any assets</p>
<p>2 sblake7 ok, now I understood everything. Thanks a lot, you really helped me out, oh well, our new EFC is $7500, cannot do anythign about it. I jsut asked my stepdad forward "if we wouldn't eat anything, wouldn't spend any money on anything, would we have 59 000 by the end of the year?" he said "yes". That's really sux for me...
For 1 month I though I'll receive a lot of help, now it's all ****ed up.</p>
<p>You should have filed the FAFSA by early March -- the deadline for most colleges, using estimates. Now you need to correct the FAFSA with the actual numbers that match the tax return. If you wait too long to file FAFSA, you might get nothing.</p>
<p>EFC of 7500 -- you should get some good financial aid offers with that. And your parents might be able to take out a loan (PLUS loan, perhaps, or a home equity loan) for the EFC amount and any unmet need.</p>
<p>Good luck!</p>
<p>2 sblake7 oh yea, I filled FAFSA, my bad, the question was if I can make correcitons little later. My parents don't own house and pretty much my stepfather is self-employer but he is not an economist. And he always changes his answers, but it's ok. Well, anyways, really thatnks for help. Now i understand the difference between adjusted gross income and taxable. Great, starting to learn my future Major (I wanna do double, Applied Math/Econ). Thanks again, really helped me out.</p>
<p>Ur welcome.</p>
<p>In order to correct FAFSA online, you put in the correct numbers, and change the box that says 'will file taxes' to the box that says 'have filed taxes'.</p>