We have a low family income of 48K- that would be the AGI. Since we are under 50K I think we would qualify for the SNT. The questions I have are:
We completed the 1040 last year with itemized deductions- only because it was 1K over the standard. Can we complete the 1040A this year even though we itemized last year?
Also I read that you cannot complete the 1040A if you contribute to a qualified retirement plan. I have a 401K that I contribute through work, does that count? Other than that we have no retirement annuities/CD’s etc. Or do you add what you contributed to your income?
The only deduction we would have is student loan interest which would lower our AGI.
When the FASFA is being completed and it is determined that you qualify for SNT I know they do not count assets. But do you still have to list them on the FASFA? I know if a college has a PROFILE form that would be through the institution and you would list them.
Yes you can use the 1040A this year. You can also file the 1040A with a 401K. If you are filling out the FAFSA online I believe it uses skip logic. If you qualify for SNT then the assets question never gets asked.
Others who have gone through this themselves can correct me.
There is nothing listed on our tax return about the 401k. But on the W2 it will list your federal income (box1) as gross income minus the 401k contributions. Then there will be box 12 a filled in with code D and amount of contributions. Also box 13 ret plan will be checked.
But when you fill out the FAFSA you will need to answer question 94a (parents’ payments to tax-deferred pensions and retirement savings) and give the amount of your 401k contributions, they will be added to income for FAFSA.
When you figured your income as under 50 k, is it still under 50 k with the 401k contributions added?
Last year my wages were 50,580 and contributed 2000.00 to 401k in the box. But with the student loan deduction the AGI line 37 was 49502. This year my employer changed the bonus structure so I should have under $45K in the wages box and I am contributing more at about 3000.00 this year to the 401K. I figured it out by looking at my Federal taxes on the stub (in 2014 12/31 pay matched the W2)
Thanks Madison- should be under 50K this year. Do you know if deductions to Heath Savings Accounts are added back in too? Company going to HDHP not as an option in the next few years.
Your 2015 tax return will be used for the 2016/17 FAFSA available in Jan '16 and also for the 2017/18 FAFSA that is supposed to be available in Oct '16. They are going to make it possible to file the FAFSA earlier.
If your 2015 income (AGI) will really be $45k and $3k 401k contributions added, that is $48k, that would be under the SNT threshhold and good news for you.
Now I don’t know how the HSA affects that in future years and if you have to file 1040 with that.
The 401k is added back in on the fafsa, but not until after the simplified means test is met (and it asks if you want to skip the assets questions; respond yes). If your AGI is under $50kand you meet one of the other tests, you’ll qualify for the simplified assets. Last year my gross income was above $50k with 401k deductions. It was still above before I took an IRA contribution, but then below. I qualified for simple assets.
There is actually a question on whether you qualify to file 1040A but just chose 1040. Read that question and see if you can still use 1040. Qualifying for simple assets might not help you that much if your assets are all within the excluded amount.
You qualify for simplified EFC if (1) and (2) are true
(1) on Free Lunch or other benefits OR
filed or were eligible to file 1040A or 1040EZ; filed 1040 but were not required to*; or were not required to file OR
parent is a dislocated worker
(2) Parents AGI = $49,999 or less
*applicants who were not required to file a 1040 but filed a 1040 solely to claim an educational tax credit are considered eligible if they meet all other requirements for simplified EFC.
When you file online and qualify for the SNT you will be asked if you would like to skip the asset questions. If you are applying to a CCS school, they might correct your FAFSA to include your assets. I don’t know why but it happened to me but it made no difference.