My mom receives an untaxed income for taking care of my grandfather and I was wondering if the IRS Data Retrieval tool would already account for this. I ask because I listed the income on my FAFSA after using the tool (line 94i) and want to make sure it isn’t being counted twice.
I live chatted FAFSA chat support and one of the people said not to manually report it because of the Retrieval Tool. However, she said that it was already accounted for in my AGI. It does not sum up in my AGI, though we have W2 wage papers for it. Thus, I’m a bit confused on whether I manually report it or if the tool already did it for me.
My best guess is that it’s not included in the DRT, and that you need to manually include it as other untaxed income.
You have a really obscure situation, and for the DRT to have already included it on the FAFSA import would require that they did more work to handle that specific obscure situation than they did for the very common situation of an IRA rollover. But because I’m not the person responsible for programming the DRT, all I can give you - and all anyone else here can give you - is a best guess.
I agree with you that the FAFSA chat support person had no awareness of the correct tax reporting for your specific obscure situation. (For anyone wondering about that, it has been endlessly rehashed in a different thread started by OP. OP is correctly representing that their parent has income reported on a W-2, but which is appropriately treated as untaxed, and therefore backed out on Line 21 of the 1040. It is not included in AGI.)
Thanks for the response. I decided to start a new thread because the old one was a lot of discussion and I feared this question would get lost between the numerous comments in the other thread.
The person I live chatted with (I asked two of them; they both said the same thing) told me not to include it as this counts as an “Untaxed social security benefit”
I showed them this link and though it is Medicare, they still regarded it as an untaxed social security benefit.
Untaxed social security benefits need not to be reported on line 94i → “Other untaxed income not reported” according to FAFSA’s criteria for the inputs in this section.
After removing the $8520, my EFC dropped from $12000 to $8000, which is nice. But it seems too good to be true.
Is there any solid way of confirming if I need to report this? Calling FAFSA? i fear that they’ll say the same thing as the live chat people did.
Also, if I end up not reporting it and listen to the FAFSA employees, will I be in trouble if this ends up being the wrong way to go? How will this impact me? I believe College Financial Aid Officers ask for all tax returns, etc before giving aid and would rectify the error and award less aid? For what it’s worth, I have printed out copies of their chats.
I just want to make sure I do what’s proper and ensure no legal troubles occur due to not reporting nor do I potentially end up paying more than I would if I do report it.
I think they’re wrong, and the issue is that they have absolutely no idea what the program is or how it works. I believe it falls under “wages not subject to taxation by any government,” which FAFSA help says should be included on that line. https://fafsa.ed.gov/fotw1920/help/faadef33.htm
@allyphoe Alright, I will put it as an untaxed income. I’ll make sure to closely talk to the financial aid offices at the Colleges I get into to ensure they didn’t count it twice, seeing that FAFSA is a bit unclear on this.
I have another question, though. I know EFC isn’t the amount of $ you will pay for attending a college, say a Public UC. Is this estimate close, though? I’m unclear as to what the purpose of the EFC is?
Lastly, will I ever learn that I filed my FAFSA incorrectly if our suspicions are wrong? Or is the FAFSA completely based off of the student’s input and has no people checking to make sure I didn’t incorrectly account for it twice?
No, it’s not intended to be an estimate. The main purpose of the FAFSA EFC is to determine eligibility for Pell Grants (yours is too high either way) and subsidized student loans (yours is low enough either way).
Financial aid officers at the schools you apply to do look at it. Once you get a financial aid package, you can ask them to check that the untaxed wages were handled correctly. They have the ability to make adjustments at that point.
I am honestly not the best person to be answering this last batch of questions, though. I am really good at reading forms instructions and I understand tax stuff. But I don’t know much about the school end of stuff.
You need to be more specific about the money your mom earns. You stated that she receives a W2 for the income - if that is true, she would have included the W2 wages on her tax return - which means she would have paid taxes on them (reporting the wages on the tax return includes them in the AGI, which is the amount on which taxes are determined). If she did not receive a W2, was it actually social security, or was it payment from another program (like Medicaid or from a long term care policy?).
You may or may not have to report as untaxed income, but you’ll need to be a bit more specific in order for us to be able to help you. You are better off fixing it now, so that when aid is packaged you won’t miss out on any grants that might be available to you.
My mother does receive a W2 income. The employer on the form itself is my grandfather, since she takes care of him. It is a W2 wage, but it is not summed into my AGI as it is untaxed.
I’m getting mixed answers on the situation and I don’t know if “fixing it” by not listing it is the best way to go. For what it’s worth, I’m applying mostly to Private Colleges and the CSS Profile requires me to list ALL forms of untaxed income, regardless of if it is social security or not. So, this FAFSA listing would only help me for the UCs. I don’t think it’ll have a big impact on my aid package even if I accidentally listed it twice? I’m currently thinking of just listing it and then double checking after my UC aid packages have been created to ensure no fraud was done. What do you think?
Is what your mom receives called In-Home Supportive Service payments (for your grandfather, but payments made to your mom)? If so, you do have to include them in untaxed income. I verified this using a tool available to financial aid professionals.
It’s possible you may be able to include your grandfather in your household size if he lives with you & your family is paying for more than 50% of his needs.
@allyphoe So, do I report this as an SSI (Supplemental Security Income) on FAFSA rather than untaxed income?2
I quote:
Supplemental Security Income (SSI) is managed by the Social Security Administration. The SSI program makes monthly payments to people who have a low income and few resources and are: Age 65 or older, blind, or disabled.
SSI is always untaxed.
@kelsmom I suppose it is an SSI. It says specifically to people over 65, but my grandpa is the one over 65.a Still counts as a SSI?
The FAFSA EFC only tells you if you qualify for a Pell Grant. If it’s over ~$6k, you won’t be eligible.
Wasn’t the $12k EFC calculated without the value of the 2nd home and foreign bank accounts? If it’s without, then the calculators won’t be accurate. You have to include all that information. If you’re chosen for verification then your financial aid package can be recalculated. If you were given too much, you’d be required to pay it back.
The accuracy of financial aid estimators depends on several things. If you input all the information correctly and your parents aren’t divorced or business owners then the accuracy can be pretty good. The colleges need to have updated calculators though. Sime are better about updating than others. Also, some calculators are more detailed than others, so that can help.