<p>And I was reading another post of yours about the CSS/Financial Aid PROFILE. </p>
<p>So if the college Im looking at uses the FAFSA and CSS/Financial Aid PROFILE, then the FAFSA wont look at assets if we use the simplifed needs test, but then the CSS/Financial Aid PROFILE will look at assets?</p>
<p>So, is my EFC accurate then? This is confusing. LOL</p>
<p>Still have a year to figure it out though :)</p>
<p>Those appear to be all be federal assistance programs -- so they have (presumably) already done an income/asset check. Believe me, no one with a $5 million or a recent $10,000 inheritance is going to qualify for any of those programs.</p>
<p>Also -- I just did a google search on the words inheritance fafsa. There was not one link that I looked at that gave any indication at all that an inheritance would not be reported as income on the FAFSA.</p>
<p>lovelykittycat</p>
<p>As to post #20:</p>
<p>Try the following link: it explains both exceptions to FAFSA and your question about not using those benefits (it doesnt matter one way or another).</p>
<p><a href="http://www.collegecosts.com/whatsnew.htm%5B/url%5D">http://www.collegecosts.com/whatsnew.htm</a></p>
<p>As to post # 22</p>
<p>Keep in mind that the EFC as calculated by FAFSA only applies to federal programs (Pell grants, subsidized Stafford loans, federal work study, etc.) I hate to use an absolute and someone can correct me, but if youre applying for aid based on need, all(?) schools will require you to fill out FAFSA. If you are applying to a school that also uses the CSS Profile, there is no simplified needs test or automatic zero. What this means to you is let say you apply to a school that uses both (FAFSA/Profile) and you meet a FAFSA exception. Part of your financial aid package may include money from federal programs and part out of the schools own pocket. The part that is from federal programs will be based on the EFC as calculated by FAFSA. The part that is out of the schools pocket will be based on an EFC as calculated by the school using the Profile. </p>
<p>If youre going to a school that only uses FAFSA, as to any part out of a schools own pocket, the school will rely on FAFSA, but to what degree varies from school to school, how much they want you, etc.</p>
<p>So yes, if you meet the simplified needs test, all family assets are excluded. Again this only applies to eligibility for federal aid programs. The Profile will look at assets, even home equity depending on the school. </p>
<p>Weenie: as to federal aid programs, youre wrong. If you meet the simplified needs test, all family assets will be excluded from the EFC calculation. As to federal aid programs, if you meet the automatic zero, you will be eligible for a lot of federal financial need based aid.</p>
<p>An inheritance is a gift. You didnt find any website because an inheritance is not income. If you get $100 in your graduation card from each of your 10 uncles, are you going to report it as income? Does the same money received from dead uncles change anything- the IRS says no, so why would you? Again, assuming any of this money is left on the day you file FAFSA, the proper place to report it is on the line regarding cash (an asset), not income. And even worse would be to report it as both income and cash.</p>
<p>jugulator: No. My point about the federal aid programs relates to post #20. Doesn't that ask for both an income test AND that you have qualified for one of these programs? So my point would be that perhaps they threw in the part about these other programs, assuming that they had done an asset test.</p>
<p>Also, I didn't say I couldn't find any web sites (or that wasn't what I meant). There are tons of web sites -- and they all (near as I could tell) call an inheritance income for the purposes of the B section on FAFSA. It doesn't indicate that I could see that they are treating an inheritance the same as the IRS.</p>
<p>Weenie: remember, Im talking about FAFSA and federal aid programs only. FAFSA is not a person. FAFSA is a computer program. I did not write the program nor do I have access to it. As I said in post 15 above, as calculated by FAFSA, an EFC is a sum of a percentage of four factors-parents income, students income, parents assets, and students assets minus the standardized deductions FAFSA allows. </p>
<p>From what I can gather from reading books, online, etc, once one submits FAFSA, there apparently are critical triggers in the way FAFSA is programmed. One is the parental AGI. As stated in part on the link of post 23 above, if the parents AGI is under 20K (the Automatic Zero) , the EFC is set to zero REGARDLESS OF OTHER INFORMATION REPORTED ON FAFSA. And if the parental AGI is under 50K, the Simplified Needs Test allows ALL ASSETS reported by the student and parent(s)/stepparent to be ignored </p>
<p>Previously, a second trigger was based on what federal tax form the parent/student completed. Prior to this year, both parents and students had to fill out a short form and the parents had to meet the specified AGI. This link states that the students tax form is now irrelevant. In addition, the link states that a family can still qualify for these FAFSA exceptions AND file a long tax form even if they have received money from one of these federal programs. Apparently, if a family previously filed a long form and was receiving money from one of these programs, FAFSA was programmed to look at all reported FAFSA information.</p>
<p>I asked in post 9 above, but Ill ask again, could you please direct me to any website where it states the 70K inheritance will be considered income for financial aid purposes?</p>
<p>Hey Jug, how bout this website: <a href="http://www.irs.gov/taxtopics/tc422.html%5B/url%5D">http://www.irs.gov/taxtopics/tc422.html</a></p>
<p>
[quote]
Topic 422 - Nontaxable Income</p>
<p>Some types of income you receive are not taxable. When you total your gross income to determine whether you are required to file a tax return, do not include your nontaxable income. Keep records of your nontaxable income. Some types of income that generally are not taxable include: </p>
<p>Child support payments,
...
Certain property received as a gift or inheritance,
...
[/quote]
</p>
<p>I thought we were talking about cash, not other property (like real estate, stocks, etc.)</p>
<p>Jugulator</p>
<p>I did not realize they changed the criteria for the Simplified Needs Test. Thanks for the update!</p>
<p>dt123 quotes "Certain property received as a gift or inheritance" as one type of non-taxable income. I read this sentence as certain property received as a gift or certain property received as an inheritance (not necessarily all inheritances, but certain property received in that way). </p>
<ul>
<li>Does anyone know what the word "certain" refers to in the sentence?</li>
</ul>
<p>Does anyone else have new info regarding how an inheritance is handled for FA? Maybe someone has been through this recently.</p>
<p>I'm new to CC, but this question interests me, as we will be dealing with applications next fall. Any light shed on the subject would be appreciated.</p>
<p>You know, the fine print in my FAFSA verification forms was very clear that "other income" included money given by others to help pay bills, cash gifts, etc.</p>
<p>What d123 said, as I said earlier. My verification forms flat out make clear that I am to report ALL money my child or I recieved in the year, including non-taxable income or other things that don't go on my taxes. If my partner writes me a check for 200.00 to help me out, that's included in "other income not otherwise reported" -- not some amorphous "gift" that I don't have to report. I have to account for every dime that comes into my hands in the course of a yeaer.</p>
<p>Here are some sights that indicate inheritance must be reported. </p>
<p>From skidmore FA glossary. Others use this also
Income: amount of money received from any or all of the following: wages, interest, dividends, sales, or rental of property or services, business or farm profits, certain public assistance programs, disability, inheritance, gambling or contest winnings, or retirement benefits and other types of taxable and nontaxable income.</p>
<p>When completing the FAFSA on the web, the Department of Education regulations require students and/or their families to report all sources of income (including, but not limited to, employment, Veterans Benefits, interest on investment income, trust income, inheritance, etc.).</p>
<p>E._____ One-time-income: (i.e. inheritance, moving expense allowance, back year Social Security payments, or lump sum retirement or IRA distribution).
Please attach a separate letter that identifies source of income and how funds were spent or invested.</p>
<p>What type of changes in my own personal circumstances am I REQUIRED to notify the Student Financial Services Office about and how do I initiate this notification?</p>
<p>There are certain changes in your personal circumstances that you are required to notify Student Financial Services about should they occur at any point during an academic year for which you have a financial aid award. These changes include, but are not limited to: changes in your marital status, ... enrollment in post-secondary education program, any increase or decrease in outside funding (grant, loan, etc.) from any source, changes in your assets (inheritance, prize winnings, large monetary gifts).</p>
<p>You must apply to renew federal loans every year by filing a new FAFSA, and your loan eligibility is subject to change during your school term (say, due to inheritance or marriage).</p>
<p>I inherited money. Can I invest it so that it won?t be considered all available for college?
You must report the total inheritance on your FAFSA. Student assets will be computed at a higher rate than a parent's (35 percent vs. 5.6 percent.) If possible, place your inheritance funds in their name.</p>
<p>And, different ways Professional Judgement can then be used to deal with the inheritance. </p>
<p>Professional Judgment appeal</p>
<p>In same cases a family?s financial situation changes significantly from the base year financial information used on the FAFSA. Some criteria that might qualify for a Professional Judgment are:</p>
<pre><code>* Unexpected unemployment or a change in the employment of the household. Whereby you were laid off, fired, or had a drastic reduction in the overall income of the household.
* A Divorce or separation that is finalized. However joint taxes were filed.
* Death of a spouse or parent resulting in a diminished family income level or increased financial burden.
* Disability of a student, spouse, or parent.
* A one-time income (examples: inheritance, moving expense allowance, severance package, IRA, or pension distribution).
</code></pre>
<p>∑ Other situations drastically reducing a family?s current income.</p>
<p>You and/or your spouse received one-time income in 2005 that will not occur in 2006 (e.g., rollover into a Roth IRA, moving expense allowance, back-year Social Security payments, or a divorce settlement). Special circumstance consideration will not be given if this one-time income is a result of an inheritance, job bonus or overtime compensation, gambling winnings, pension, capital gain, insurance settlements, or early distributions of retirement accounts.</p>
<p>Also, don't assume that the financial-aid package you are offered is the final offer. You have the right to ask that your application be reconsidered, but be sure you have a good reason.</p>
<p>Good reasons include receiving an inheritance or other one-time lump sum that skewed your financial picture, or extraordinary circumstances such as caring for an elder relative or paying for private-school tuition that may not have been taken into account.</p>
<p>Thank you for all the information--I had no idea it was this intricate and involved!</p>
<p>anyone have anything more current to add to this?</p>
<p>My dad passed away a few years ago and left $ to my mom as he had told us he would be doing. His intent was to ensure SHE was taken care of. Unfortunately, she “rejected” the inheritance so it would pass directly to their 3 children. My accountant brother encouraged this move (for eventual tax reasons). It worked out well for my brothers as their kids attended inexpensive (in)state schools and didn’t receive FA. BUT we would have been better off if the $ went directly to my mom, who SHOULD be the recipient.</p>
<p>At the time, we had 2 kids in private colleges and both were receiving FA and the inheritance did reduce the aid (amount and type) offered. Obvioulsly our EFC went way up and we lost fed aid, but fortunately we still received some institutional aid. Luckily my DD’s package included a merit award and although her FA grant decreased somewhat, she won a couple additional merit scholarships awarded to upperclassmen so that helped. Since her school “gapped” us, it didn’t have as big an impact as with our son who attends an IVY (no merit $). Our parent contribution increased significantly but not as bad as I had calculated. I think they considered our appeal, where I explained how we were using this money to pay my mom’s rent and my airfare/living expenses to go take care of her while she recuperated from a brain bleed and numerous surgeries. We moved the remainder of the money to a separate account to save for her needs. But as we feared, both colleges expected us to use some of “her” money to pay college costs. We gifted some back to her and spent down most of the remainder on her expenses. We still have one kid in college and another to start in a year and it doesn’t make sense to be holding that money for my mom. She’s the one who deserves it.</p>
<p>Unfortunately NO ONE asked us about the inheritance before making the decision to bypass my mom. They didn’t understand the implications.</p>
<p>We also reported ALL the cash awards and local scholarship checks, regardless of how the checks were written. Even some of the HS administrators said they didn’t report the $ their kids got (they considered them gifts from some of these local groups). BUT we just didn’t feel right AND we didn’t want it to come up later on and risk any FA given to us.</p>
<p>But in the end you were fortunate to have that inheritance to help you with college costs. We had the same thing happen when my mom died. The money came to me…and while it wasn’t income, it WAS in the bank the second year DS was in college (took a year to get through probate). It reduced our EFC but our EFC was mighty high anyway. We felt so fortunate that grandma’s money was being spent on something that would have made her feel proud.</p>
<p>thumper, I agree with you. The problem was that my dad didn’t envision this $ going toward college costs because he knew my mom was in poor health and he wanted her to be taken care of - as do we. She has significant health issues and we would feel terrible if she can’t receive the healthcare she needs because we spent this $ that was intended to help HER. So, in the end, it has worked out ok. My mom has been able to receive the healthcare whe needs. We wound up paying a bit more of the college costs than we would have had to but it could have been worse. Fortunately we had records to show the colleges and they evaluated our situation as it was.</p>
<p>Jerz…another thing you and your sibs could have done was to “gift” your mom money annually and build up a little nest egg for her out of that inheritance money. I’m not the expert on this but I believe the gifting limit is now $12,000 a year…per person…So…each of your sibs could have contributed (or not…their choice) money to mom…and that would have reduced the assets held in your name. Just a thought for others in a similar situation.</p>