FASFA - Where to type in 401K/unemployment money?

Paying for College
1

Hello all, so around October 2017, the store my mom used to work for 10 years closed. She decided to take a break from working before getting hired and starting again in April 2018. In that period of time she took money BOTH from her 401K and unemployment.

she took from her 401k which was ~$5,000 and from unemployment which was about ~$900
(these taxes are all payed for by the way)

My question is, do I put in those total in the box that asks for “How much did your Parent 2 (father/mother/stepparent) earn from working (wages, salaries, tips, etc.) in 2017?”

or in “Payments to tax-deferred pension and retirement savings plans (paid directly or withheld from earnings), including, but not limited to, amounts reported on the W-2 Form in Boxes 12a through 12d, codes D, E, F, G, H, and S. Don’t include amounts reported in code DD (employer contributions toward employee health benefits)”

*in this box, I already have a number, in where I added two numbers from both my parents W2s… coming in at $674.00 *

do I add both the 401k and unemployment money together and put it in one of those boxes mentioned above

or even put those amounts in my FASFA at all?

This may seem like a silly question but my mom likes to be tedious with this as we filed for bankruptcy and sell our home in a short sale when the whole 2008 financial crisis happened, so all that stuff reflects in our taxes and we have to be accurate with what we put in

Hopefully I posted in the correct forum or necessary info.
Thank you!

2

Neither of those go in either box mentioned.

3

The money your mom took out of her 401K was a distribution…not what she contributed to that account. The question you are mentioning above asks what she contributed to tax deferred accounts…”payments TO” not from.

For the 2019-2020 FAFSA, you will only be using the amounts taken from the 401K during that tax year. And you will only be using the unemployment income taken in 2017.

I believe both of these are untaxed income…but @BelknapPoint will know for sure. ETA…I believe unemployment is taxed…but it’s unearned income, I believe.

Did your mom take a withdrawal fro her 401K or a loan?

4

@allyphoe I suspected so

@thumper1 that makes sense. ive been doing FASFA for 4 years now and this is the first time we have monetary amounts that is specifically from work wages

also, the 401k was a withdrawal

5

That’s NOT true if your mom was working for ten years. Her income from work would have been…wages.

6

@thumper1 sorry I meant, not specifically

7

The 401(k) distributions and the unemployment payments are probably taxable, but I don’t think they should be included with money earned from working on FAFSA line 88 (parent 1) or 89 (parent 2). Instead, the 401(k) and unemployment payments will be included in AGI, which for a parent is reported on FAFSA line 85.

8

Did your mom file a 2017 tax return?
Did your parents file separate tax returns in 2017?

Unemployment compensation is taxable as far as I know, and your mom should have received a 1099-G form for the amount she received in 2017.

Did she withdraw money from the 401k in 2017? If she did, she should have received a 1099-R.

9

Agree with @BelknapPoint - the money is going to be included in AGI, so should not be reported twice.

10

@mommdc she filed joint-married
and I looked at all the paperwork and dont think she got a 1099-R, even tough she did withdrew ,money in winter 2017… unless she’ll get one when filling for the 2018 tax season soon

but that money is reported under lines 16b and 19 on the 1040 form they did.

11

@BelknapPoint thank you, I figured putting those amounts in line 88-89 didn’t make sense…
also I used the IRS data retrieval tool and the amount that should go in line 85 is already transferred… does this mean that the 401k and unemployment amounts are already in line 85?

12

If you used the data retrieval tool all of the tax information should have transferred over from their joint return to the FAFSA.

Then you just have to list each income from working for each parent.

The only other thing you would put in would be if your parents had pretax 401k contributions during 2017, question 94a.

13

The IRS DRT uses what was on the submitted tax return. Just make sure THAT was correctly done.

You might want to ask your parent if they collected unemployment in 2017, and if so…was that amount included on their 2017 tax return.

Ask also if they withdrew 401k money in 2017. And also ask if they took a loan or withdrew the funds.

14

@thumper1 yes, my mom collected unemployment in 2017, and yes it is included in the tax return.
The 401k was withdraw, and in 2017. It was not a loan

15

Then if you used the IRS DRT, this should all be included in your form already.

One more question…did your mom have a tax deferred retirement account that she rolled over to another tax deferred retirement account…and did she do this in 2017? If so, did you answer that question on the FAFSA, and check the little box? If not…this rollover will be considered as income for 2017.

16

@thumper1
nope, nothing was rolled over to another account