<p>Just curious - I updated our family's FAFSAs finally with the IRS tool, and the taxes that we parents paid ended up being a few thousand lower than we had estimated (we were definitely taking a guess initially) although all of the other numbers such as income were the same as our estimates. The only thing that changed was taxes paid. The EFCs took quite a jump and our kids are not eligible for the small Pell that they it appeared they were initially. </p>
<p>I just wondered how that change in taxes paid affects the EFC - is that difference considered as if there was more net income? Or how does that work? We did have lower income on all counts this year but it didn't change the EFC much from past years. We are kind of disappointed, as that small grant still would have helped, of course.</p>
<p>In addition, we are still marked for verification for the first time ever. UGH!</p>
<p>Taxes paid are a $ for $ allowance (reduction) against the income used in the EFC formula. So less taxes means more money available to calculate the EFC.</p>
<p>So if the AGi was 50,000 and taxes paid are 7,000, the income used in the formula is 43,000. If the taxes were only 3,000, the income available to use in the formula would be 47,000.</p>
<p>It makes a difference because the formula subtracts the taxes paid from income. And income is the main driver of the EFC.</p>
<p>Thanks for the explanation. That’s what I thought (although not expressed very well!). Everything is basically the same as last year, except our income went down by several thousand and a few hundred less in taxes paid, with a kid’s income halved, so it surprised me. I expected more of a difference in the EFC from the past but I was overestimating, I guess. Oh, well, the loans continue, sadly.</p>
<p>Always appreciate the help here. Thanks. :)</p>