I am currently entering my freshman year of college and will be filing taxes for the first time next year. As a result, several questions come to mind that I hope to find answers to here.
Will the money I earn from my part-time job affect the amount of financial aid I receive? I will probably not make more than $6,000 in total by the end of this year.
I will be receiving a refund from my university for the fall semester and I believe I will have money left over once I buy books and supplies. I read that money saved in my bank account can count against me when it comes to FAFSA, but is this still the case when the money in my account is a result of scholarships/grants?
Do I only include the financial aid I am receiving for fall semester in my FAFSA since spring semester is a part of 2017?
How/where exactly do I list taxable scholarship money on my FAFSA? I do not need to include scholarship money used for tuition/books, correct?
Sorry for all the questions, I’m trying to get everything sorted out beforehand so I’m not completely lost once FAFSA season rolls around in a few months.
Thank you for any assistance I receive!
Your 2017-2018 FAFSA will use 2015 tax information. So any income you have from 2016 would not be on this FAFSA at all. That being said...your financial aid is NOT considered income unless it exceeds the amount for tuition/fees/books. Financial aid that is for room and board, and persona exoenses IS considered income. But yours for 2016 won't be used until the 2018-2019 FAFSA is completed.
You will get a 1098T from your college. It will state your qualified educational expenses, and your aid. You will use that to complete your 2016 tax return…but you won’t use your 2016 tax year info until you complete the 2018-2019 FAFSA.
@thumper1 Re #1, why not? Won’t this show as taxable income? Unless it’s official work-study? Not that we can say exactly how much it will affect FinAid, and possibly not at all, but it certainly factors into determining the EFC, doesn’t it?
Is that assuming OP is a dependent student? Because there’s nothing about $6000 for my D who qualifies as independent. When I plug taxable income into the EFC formula it seems every dollar gets her closer to the point where her EFC will no longer be zero.
Yes, that is assuming the OP is an dependent student.
But really…financial aid is NOT income. The only time it becomes taxable for the student is when it is for expenses other than qualified educational expenses. The. It would appear on the tax form on. A certain line…and it would be included.
But any financial aid that is for qualified educational exoenses will NOT be income at all…ever.
@thumper1 Thank you for all the help! I was just a little confused on one thing you mentioned. I thought I was supposed to offer an estimate of my 2016 tax information for the 2017 FAFSA and update it once I actually file my taxes? Basically, I’m a little confused as to why I use 2015 tax information for the upcoming FAFSA. @alooknac If it helps, I will be filing as a dependent student.
@thumper1 Ah, I looked into any FAFSA changes that may be occurring for the 2017 FAFSA and found that it will be available earlier and use the previous year’s tax information. So it will basically be like filling out the 2016 FAFSA since the same year’s tax information will be used?
When you filled out the 2016/17 FAFSA it used 2015 tax return info. The 2017/18 FAFSA will also use 2015 tax return info.
A dependent student gets an income protection amount on the FAFSA, it is around $6400. You also get some deductions for federal, state, soc sec taxes paid.
If your scholarships and grants exceed tuition, fees, books then the excess needs to be reported on your tax return as income. But there is a question 44d on FAFSA where student lists the amount of taxable scholarships reported on the tax return. That amount then gets subtracted from income, so only your work income will be considered.
That will be concerning your 2016 tax return and be reported on your 2018/19 FAFSA.
Taxable (ONLY TAXABLE) grants and scholarships ARE reported on FAFSA (item 44d in most recent edition). They are reported so that FAFSA can subtract them off your AGI (Adjusted Gross Income) which is on your tax return.
The sequence is:
You report grants and scholarships over and above Qualified Educational Expenses on your tax return.
You pay taxes on them (maybe not, if your income is low enough, but you still report them).
FAFSA asks for your AGI (Adjusted Gross Income) from your tax return.
FAFSA asks for the amount of your taxable grants and scholarships.
When figuring your EFC, FAFSA subtracts the grants and scholarships from your AGI, so they have no effect on your award.
Alright, so if I understand correctly, the taxes I file next year will be used for the 2018 FAFSA. My 2015 tax information will be used for next year’s FAFSA, but my assets may not necessarily be the same.
For personal clarification, the scholarships/grants I am receiving for the upcoming school year will not be reported on the next FAFSA since I’m a freshman and didn’t receive financial aid last year, correct?
But if that is the case, in regards to my assets, if I have money in the bank from excess scholarships/grants, where will they think the money came from since I have to report my assets on the day I submit my FAFSA application?
Sorry if I’m misunderstanding this aspect of the FAFSA process, this all still seems pretty new to me.
The 2016 taxes will be used for the 2018-2019 FAFSA.
If I’m reading this correctly…you have financial aid money in your account. THAT money does not get listed as an asset. If it were me, I’d keep it in a separate account…but at the very least keep any documentation of the overage so you can document it if needed.
Scholarships/grants do not as a routine matter get “reported” on FAFSA. It sounds like this is where your confusion lies.
As others have told you, if you have excess scholarships and grants in your possession on the day that you file FAFSA, this amount needs to be reported so that it can be subtracted from your other assets and not used in the financial aid calculation (this is a good thing for the student). Also, scholarship and grant money that was included in taxable income needs to be reported, so that it likewise can be disregarded when calculating financial aid (this is also a good thing for the student).
My D got a federal student loan refund of about $1,500 for this semester. When we file FAFSA in October she will only list as assets her savings from working that are in the bank. The financial aid refund is kept in a separate account and from what I understand she doesn’t need to report that as an asset for FAFSA.