I noticed some colleges’ NPC asked for the amount of tax paid in addition to the amount earned. In 2015, my tax was low because of a large medical expense. My tax was done by a CPA, and I believed it was accurate. I thought the EFC is determined by the amount earned + asset, how do the low tax payment and medical expenses factor into the aid calculation? - thx
Low tax payment can increase FAFSA EFC.
The FAFSA EFC formula looks at AGI, also income from working.
There are deductions for soc sec taxes paid, state taxes paid, federal taxes paid.
So the higher those are, the higher the income deductions.
Parent assets get an asset protection amount that increases with age.
The net price calculators ask for amount earned…and taxes paid. So does the fafsa. So does the Profile. (Well…at least they did when I completed them).
@mommdc thanks. I am confused.
If the tax paid were low, that meant (to me) the income deduction was low, i.e. parent could afford more. (??) .
The AGI was listed on line 37, but the taxable income was on line 43 after the itemized deduction, isn’t taxable income better reflects whether the family can afford the tuition?
Schools use the AGI to compute need based aid. Some state grant programs like Calgrant and TAP use the AGI.
https://studentaid.ed.gov/sa/sites/default/files/2016-17-efc-formula.pdf
^this is the EFC formula the FAFSA uses, if you want to read it.
For some items like soc sec tax deduction the income from working us used, for others AGI.
A lower available income is better for FAFSA EFC.
What is a “lower available income”? @mommdc
Some folks would say they have a lower "available income because they have a larger a larger payment, support relatives who don’t live with them, have large consumer debt…thus making their “available income” for college purposes lower.
Please clarify this.
I think you mean that a lower AGI will yield a lower EFC.
“Available income” as the FAFSA sees it. AGI minus income protection amount, minus soc sec taxes, state taxes, federal taxes paid.
The FAFSA uses everyone’s AGI. They do not consider some of the deductions like medical deductions that reduce taxable income.
Therefore a high medical bill does not really help to get more aid, right?
Some schools might look at high unreimbursed medical bills and give more aid, but probably not FAFSA only schools.
The FAFSA takes into account AGI, income from working, one or both parents working, taxes paid, household size, number of students in college, but not CC debt, taking care of relatives, high medical bills.
@annamom the high unreimbursed medical expenses would be considered based on a special circumstances consideration. High medical,expenses are not part of the financial aid application forms (there is a place to mention them on the Profile, .but no way to actually document them).
Some schools do special circumstances considerations, and some do not. The ones that do, handle these onna case by case basis.
We are a family that has plenty of high unreimbursed medical expenses, and who have applied to several schools, both Profile and FAFSA only. Based on conversations we have had with FA advisors, we heard a lot of different approaches. Some schools have told us they will look at your entire tax return, where they can see your unreimbursed medical expenses, and consider it, so they don’t need you to elaborate in the special considerations, but other schools do expect an explanation.
Some schools look at not just the AGI, but also all of your deductions.