Financial Aid - Low income, No Tax Returns

<p>Hi everyone. This is my first time posting on college confidential.</p>

<p>I recently completed the main part of my college applications. I've sent my SAT/ACT/first quarter senior grades, common app and supplements. I have my accounts for all of my colleges, and nothing is missing.</p>

<p>I come from a very low income household, I live with my single mother, who is unemployed and has been for several months. When she was employed, she worked only part time, and made very little money, such that she didn't have to pay taxes.</p>

<p>I know that I have to fill out the FAFSA in January, and that I have to fill out the CSS and send it to my colleges before December, but a lot of financial aid websites say they also require you to send in 2011 tax returns and "W2" Forms. My mother and I have never had to fill out any of these documents, given our economic situation.</p>

<p>I am completely stressing out about that, what do I do? Do I need to email all of my colleges and explain this to them? They list these documents as requirements.</p>

<p>Thank you for your time, consideration and help.</p>

<p>If your mom really didn’t HAVE to file taxes, she will provide the colleges with a non-filers form.</p>

<p>If you plan on applying for any kind of financial aid at the colleges, be as honest as you can on the FAFSA in January. </p>

<p>Some people have very limited income and may not be required to file a US tax return, but you still have to put your family income on the FAFSA. If it is going to take time to get other documents, you can estimate your expenses and turn in the FAFSA before March 2, and when all of your documentation is completed, then you can finalize the FAFSA.</p>

<p>Many very low income families do not have any income other than federal assistance. This type of “income” is not required to be listed. It is possible that the school might ask for verification of SNAP at some point, if it is listed as a resource, but schools are pretty good about not making low income families jump through hoops to get the aid they need.</p>

<p>Just want to add to Kelsmom’s post. Colleges will work with low income students to help them get the awards to which they are entitled. This might NOT cover the full cost of attending a school that can’t be funded with the federal (and state if they have it) money for low income students. </p>

<p>What I’m saying is that if a low income student wants to attend a school that costs $30,000 a year, and they NEED aid in that amount to attend, it is unlikely that the federal and state awards will cover that full need.</p>

<p>For what it is worth, your mom should consider filing a tax return in order to qualify for the Earned Income Credit (EIC). This is a refundable credit for low income households, originally intended to refund the Social Security payments. Since then it has expanded as the federal tax code becomes another vehicle for welfare payments. Your mom probably qualifies for this “negative” effective income tax rate.</p>

<p>I’m sure she can find a tax preparer to help her complete and file the forms for low, or even no cost.</p>

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<p>There’s no EIC or any other refundable credit for a head of household filer who makes $13,649 or less and whose child is 17 or older as of the end of the year. ($13,650 or more, and you have a filing requirement.) Zero liability, zero credits, zero refund.</p>

<p>Assuming the income during the year was from a wage job with withholding, OP’s mom should file to get a refund of taxes paid in. But if her income wasn’t from a wage job with witholding (if she’s self-employed, or works under the table), there’s nothing to refund - and you have both a filing requirement and self-employment tax liability if you have more than $433 of self-employment income.</p>

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<p>VITA doesn’t work year-round, and people who make their living doing taxes don’t do it for free, or even cheap. EITC compliance is an enormous regulatory hassle, with significant preparer penalties for not documenting eligibility, which means EITC returns take more time (expensive) and create liability (expensive). IRS walk-in office might do it, if there were one close.</p>

<p>Actually, the age limit for a qualifying child for the earned income credit is 18 or younger (or under age 24 if the child is a student). rmldad is right, the OP’s mom might be eligible for the EIC.</p>

<p>Your mom can file this year, in time for fafsa for fall 2013 start. Vita sites should start to open end of January/beginning of feb… A few vita sites may be open year round and IRS offices may also help with tax prep. Check out if the financial aid u program, sponsored by nctc is available near you. They will help with both tax and fafsa and CSS and target first generation college students.
Just as a side, many low income wage earners don’t file because they are told they will not get anything back when in fact they will get a refund, just for an amount less than the paid preparer will charge. Worth it to go to a vita or TCE site who does not charge.</p>