FAFSA Simplified needs test--Question

Paying for College
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<p>Well, I guess the "good" news is that we'll actually have a (legitimately) low EFC this year, so the FAFSA filing is much more than a formality this time around.</p>

<p>However, I have a question regarding the Simplified Needs Test. From the IRS site, it appears that we will QUALIFY to file 1040A, but it refers to the choice to itemize deductions and file 1040 instead.</p>

<p>The general descriptions from FAFSA say that if you "qualify" to file the 1040A, you meet the simplified needs test.
However, the finaid calculator says that you don't qualify "If itemized deductions from Schedule A were used"..... this seems like a discrepancy in definition to me??? </p>

<p>FinAid</a> | FinAid for Educators and FAAs | Simplified Needs Test Chart</p>

<p>Anyone have any insight or experience with this? It will become obvious when I actually fill out the FAFSA, but I've got to get a lot of interest/dividend statements before I can do that.</p>

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<p>If you itemize deductions you are not eligible to file a 1040a or 1040ez so are not eligible for the simplified needs test.</p>

<p>So far as I can tell the only reasons where you can file a 1040 (other than just because you choose to with no tax benefit) is where you file a 1040 because of certain education tax benefits.</p>

<p>From the FAFSA instructions for 2008-2009
[Completing</a> the FAFSA 08-09/The Application Questions(32-47)](<a href=“http://www.studentaid.ed.gov/students/publications/completing_fafsa/2008_2009/ques3.html]Completing”>http://www.studentaid.ed.gov/students/publications/completing_fafsa/2008_2009/ques3.html)</p>

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<p>It is an odd rule in some ways. My daughter’s first year of school we could not file a 1040a because my husband had overpaid our State taxes in the previous tax year by a few dollars. As we had itemized that year the tax refund *had *to be reported on a 1040. That few dollars cost a lot of dollars in financial aid!! It just seemed so odd that everything else could be the same - the low income etc - but the type of return made us ineligible. I was stewing over it for long time ;). I’m over it now.</p>

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<p>Thanks, all!!! I get it (finally)!!!</p>

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<p>

astro - the wording in the FAFSA instructions is quite specific - if you itemize you are not eligible for a 1040a or ez so you do not qualify for simplified needs.</p>

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<p>By choosing to itemize your deductions you no longer qualify for a 1040a or 1040ez because you cannot file itemize and file those forms. When FAFSA refers to you being eligible to file a 1040a/ez but choosing to file a 1040 it means that everything you reported on the 1040 could have been filed on a 1040a or ez. Itemized deductions cannot be filed on 1040ez or 1040a.</p>

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<p>As soon as you itemize, you have put yourself into the “have to file 1040” category. Sorry. </p>

<p>The “good news” is that if your income is low due to unemployment/underemployment, you can qualify for simplified needs test without the 1040A/EZ. See this: <a href=“http://www.ifap.ed.gov/eannouncements/attachments/121608FOTWWksht0910.pdf[/url]”>http://www.ifap.ed.gov/eannouncements/attachments/121608FOTWWksht0910.pdf&lt;/a&gt;. Section 3, Q85. </p>

<p>Now there are 3 ways to qualify for simplified needs (assuming AGI less than $50k):

  1. eligible to file 1040A/EZ
  2. someone in household received federal means tested benefits at any time in 2007 OR 2008 (new - the formula looks at past two years now, instead of just one)
  3. parent or independent student is dislocated worker.</p>

<p>Hope this helps you.</p>

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<p>[FinAid</a> | FinAid for Educators and FAAs | Simplified Needs Test Chart](<a href=“Your Guide for College Financial Aid - Finaid”>Your Guide for College Financial Aid - Finaid).</p>

<p>This explains the 1040 business.</p>

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<p>I think the above posters were clear and are correct. If you choose to ITEMIZE…you have put yourself out of that exemption for being eligible for 1040A or 1040EZ. You can’t have it both ways. If you are able to complete a 1040A then do NOT itemize and do that. If you itemize, you cannot use that exemption to qualify for the simplified needs test.</p>

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<p><a href=“http://ifap.ed.gov/presentations/attachments/071508NASFAAApplicationProUpdate20092010.pdf[/url]”>http://ifap.ed.gov/presentations/attachments/071508NASFAAApplicationProUpdate20092010.pdf&lt;/a&gt;&lt;/p&gt;

<p>Page 8 of the pdf … indicates that dislocated worker joins tax form & federal means tested benefits for simplified needs & auto 0.</p>

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<p>I just realized that because my state allowed me to deduct the amount I put into my son’s 529 plan last year, I got a state tax refund of 279 and that I need to claim that as income this year (I think I will get a 1099-G) thereby messing with my plan to file a 1040a and NOT itemize and have an AGI of under 50K and qualify for the simplified needs test.</p>

<p>I’m calling my tax office tomorrow. I am going to ask them if I can file an amended return and pay the darn tax ($368) on the the 12000 that I put into the 529. Qualifying for the simplified needs test will lower my EFC by 3-4K. Seems like a no brainer, hope I can do. Ready to write a check NOW. How silly that a $279 refund because of a state deduction could mess up my plans. Thanks for letting me vent my frustration.</p>

<p>I do believe that if you don’t itemize, even if you Could, you can file a 1040A. At least that’s how I interpret the ‘rule’</p>

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<p>Basically, your last assumption is correct…they are different in FAFSA’s eyes, like most other IRS/FAFSA regulations. It would be nice to see a coming together of some of their laws, but its doubtful. Best advice would be to complete your taxes both ways and plug the information into the EFC calculator to see what would be your best overall picture. Even if you meet the qualifications to itemize, except in a few rare circumstances, itemization isn’t required by the IRS. Always read the IRS publications or consult a tax expert to make sure you are not required to itemize.</p>