<p>How exactly will the FAFSA and CSS profile accurately predict EFC for significant tax increases? The "marriage penalty," loss of deduction for charitable donations, and increased taxes, just to name a few, seem to make it impractical and senseless to base available income on completely different financial circumstances. So are there going to be any amendments to how they calculate EFC this year? I'm just speculating, but man it seems like the fiscal cliff will mess almost everyone up.</p>
<p>It certainly will. Taxes are taken into consideration for EFC and other aid considerations. As they go up, so will need for a lot of families. More students will become eliigible for more aid. in terms of FAFSA. How colleges will deal with this with their own allocations remains to be seen.</p>
<p>Of course, the impact will depend on your income. </p>
<p>Most likely, no one with incomes under $250,000 will have any increase in taxes. Last week, President Obama made an offer to Speaker Boehner that would have no increase in income taxes in incomes up to $400,000. Even for people above that, since these are marginal rates, only the amount above whatever threshold is set would be subject to increased taxes. The most that would be would be 3% increase, from 36% to 39% for the amount of taxable income above the threshold. </p>
<p>There are other taxes being discussed as well, such as the tax on capital gains and the payroll tax. So some of this will depend on your individual circumstances.</p>
<p>No knows for sure what is going ot happen and how it will affect any number of things, including financail aid. Even if need goes up, doesn’t mean that the aid will come with it, but maybe in some cases it will. It’s all an uncertainty. A shame it’s at the 11th hour like it is because unless things are settled close to how they are now, there is going to be a ripple effect through a lot of things.</p>
<p>Absolutely! And they probably won’t work this out until sometime in January.</p>
<p>
I could be wrong. I thought 2012 taxes are all set and 2013 taxes are in the air.
FAFSA/CSS profile are base on 2012 not 2013 taxes.</p>
<p>I’m well aware of the fact that they use the 2012 taxes to determine need for 2013. That’s why I was asking if they were going to take the new tax rates into consideration. The new rates only apply to 2013 taxes as far as I’m aware. Still, even if they took this into account, my parent’s ~330k income still wouldn’t get me any need aid. I was asking this more for how this would affect the general student applying for college, but thanks for the responses so far.</p>
<p>Why should 2013 FAFSA/CSS Profile concern about 2013 taxes? Most people’s 2013 taxes are a big unknown besides the tax rate changes. Also, I don’t know anyone with $250,000 income would need to file FAFSA/CSS Profile.</p>
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<p>You cant make a blanket statement like that. If a family making 250k, had one child in college, at a state school, no you probably wont get anything. However, if you have two kids in college and they are attending schools that cost 50-60k, it is a good chance that you may receive some aid.</p>
<p>Also, some schools require you to file the fafsa to be considered for ANY scholarships including merit. I have a child at Miami University(ohio), and you have to file the fafsa if you want to be considered for scholarships.</p>
<p>First, 2012 is not quite set - they still need to patch AMT, or it will hit many more families, and it will hit hard. There are a few other small items that need fixing for 2012 (which should have been done long ago, but we all understand how Congress works…)</p>
<p>As for 2013 taxes, they don’t really need to update the aid formulas. FAFSA for school year 2013-14 is based on income and taxes from 2012, and an assumption that things will stay roughly the same. Our tax situation could change (and that could happen on an individual basis whether the tax code chages or not), but so could our income.</p>
<p>CTScoutmom… “First, 2012 is not quite set - they still need to patch AMT, or it will hit many more families, and it will hit hard.”</p>
<p>No doubt about it…millions of families will be impacted by the AMT if it is not patched…right now… for 2012 tax year. I took a look at our situation…not good…would cost our family approx $6000 in additional taxes.</p>
<p>Read this…</p>
<p>[Fiscal</a> cliff opens door to an AMT fiasco - MarketWatch](<a href=“http://articles.marketwatch.com/2012-12-27/commentary/36020175_1_fiscal-cliff-tax-implications-h-r-block]Fiscal”>http://articles.marketwatch.com/2012-12-27/commentary/36020175_1_fiscal-cliff-tax-implications-h-r-block)</p>
<p>Taxes will be rising for everyone in 2013… dont be fooled. Payroll tax cut expiration alone will increase taxes approx. minimum $1000. per family. Possible loss of deductions…mortgage interest, charitable deductions, etc. Loss of deduction is also a tax hike! Medicare Premium tax of 3.8%… And then if you have to sell investments to pay for college ( including real estate) … cap. gains hike.</p>
<p>Also, a FAFSA needs to be filled out regardless of financial situation. Every year. Even if your student only wants to do a work/study = research.</p>
<p>So when is the safetest time to start filling out the FAFSA, considering the amount of uncertainty in the air that may very well extend into January and Feburary?</p>
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<p>You can always fill out the FAFSA as soon as Jan 1 with estimates. You will just have to go back in later once you have actually filed your taxes with actual numbers. You should really check the deadlines for your schools. For example, I have a sophomore in college, so since he is a returning student, the fafsa is not due until mid march, however I also have a hs senior, and most of the schools she is applying to have a Feb 1st deadline, so I will file by 2/1. </p>
<p>Unfortunately with all of the shenanigans going on in DC, the IRS has said that they will probably not process returns until late March, since they have to do a lot of programming for the new rules. So most everyone will probably have to go back into the FAFSA in march or april to verify their info so that their tax transcript is verified to the financial aid office. The problem is that is the same time most FA offices are sending out offer letters for incoming freshman. So it will be a MESS this year…</p>
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<p>Or February or March…from a practical (aka political) matter, neither side has any reason to budge off of their position. Don’t forget, that any tax changes made in June can be made retro to Jan 1, or Feb 1, or…</p>
<p>(I’ll stop there so it doesn’t get into a political discussion, but just pointing out that the negotiations could easily be punted down the road, with no clear end in sight.)</p>
<p>The negotiations could be punted and changes made retroactive but I would think the effects can’t be. I would think withholding rates, the fica increase etc. would need to be based on the law and rates as of Jan. 1. So people will be seeing less disposable income starting in 2 weeks and the pressure will mount when that happens.</p>
<p>Yes, and no. Tax rate tables will increase tomorrow. But all increases can be rolled back retroactively. </p>
<p>wrt FICA: the feds can just give it back in April '14 (with 2013 tax filings), as a credit for ‘overpayment’. An ugly solution, sure, but doable. :)</p>
<p>bluebayou…the AMT mess needs to be fixed now. It affects 2012 tax year and cant be punted down the road any further.</p>
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<p>Of all the potential increases, this scares me the most…Our household could be hosed big time if this is not fixed. I dont know why they dont either get rid of this, or make it index annually, without congressional intervention. What is most scary, they arent really talking about this at all. There are so many middle class tax payers that will be royally screwed…</p>
<p>It wouldn’t surprise me if the AMT mess weren’t fixed until February (retroactive to 2012). Never underestimate Congress’ ability to punt.</p>