Our W2 shows state wages in box 16 which is more than what is listed in box 1. I realize this is due to our healthcare annual premium amount that is being deducted from paycheck. My question is, when we put in the income earned from working on the fafsa do we use what’s in box 1 or 16? The fafsa instructions never indicate using box 16 and my 1040 does not show the income listed is box 16 only my state return… What is the right thing to do? If I use box 16 to complete the fafsa for question 88 & 89, does my EFC go up since it shows we earned more income?
For wages, use W-2 box 1, or use information from your 2017 tax return (assuming you are completing the 2019-2020 FAFSA): IRS Form 1040—lines 7 + 12 + 18 + Box 14 (Code A) of IRS Schedule K-1 (Form 1065); 1040A—line 7; or 1040EZ—line 1.
So even though box 16 on W2 is $10K more we would not report that earned working income?
The FAFSA calculations are based on data used for federal tax purposes. Don’t use box 16 (state wages, tips, etc.).
In our state the state income matches Social security income on W2. We have to include pretax 401k contributions for state income tax purposes (when received) and FICA.
Pre-tax health premiums are excluded for federal, state, and FICA purposes.
The FAFSA looks at AGI and also income from working that is listed on W2 box 1.
That is for purposes of calculating certain deductions from income before FAFSA EFC calculation.