Go with your parents to a professional tax preparer.
If your combined taxable income in 2015 from W2 and taxable scholarships and grants was more than your standard deduction of $6,300 then you might have to pay a bit of tax (if kiddie tax rules apply you will need to know your parents’ 2015 taxable income as well so they should bring their 2015 tax return too). There might be a penalty for filing late, but it shouldn’t be too bad.
Bring tuition statement and book receipts for 2015 if you have them. To help figure the taxable scholarship amount.
After you file the 2015 return you can let your school know about it and give them a copy but I don’t think it would change your EFC for 2016/17 or 2017/18 due to the removal of the taxable scholarship income from FAFSA EFC calculation.
If you answered all questions on the FAFSA honestly as far as what your earned W2 income was and that you didn’t file and since you passed verification, it should not affect the prior aid.
Your earned income was $2,500 in 2015 you said and that is what FAFSA considers.
Right…you have to pay taxes on the amount that exceeds qualified educational expenses…but I don’t think the college considers financial aid in their computation for need based aid.
So is it only my university who really cares? And about the income, which was reported anyway? My fear is because apparently you aren’t allowed to receive financial aid if you don’t file taxes when you’re supposed to, it’s called “unauthorized failure to file”. But I didn’t even know I was supposed to!
I don’t mind paying late tax fees. I’m not even worried about the IRS end-- I’ll happily file late, pay fees, and do what I have to do. I’m worried about my financial aid being revoked from the past two years because I didn’t file and because I shouldn’t have received it… but I literally didn’t know that I had to. I’ve been honest to the best of my ability, and I’d never have any reason to commit fraud here because the amount involved literally doesn’t make a difference, all the money that makes a difference has been reported.
So do I not need to let FAFSA know at all, just my school? And I will definitely file the return if necessary. Again, I’m not afraid of fees, I’m afraid of having to pay back everything and more. And being kicked out of school for being a horrible, law breaking person without my knowledge.
So despite FAFSA not “allowing” people to receive financial aid if they’re required to filed and they don’t, I’m still in the clear? Again, they have a provision saying that if you were supposed to file, but don’t, you can’t receive financial aid. But they gave it to me, because I guess they didn’t think I needed to file, either (that makes two of us). Two years in a row. With verifications and everything.
And yeah, I know the IRS would be angry, but a fee and a payment plan isn’t a horrible punishment. I’m afraid of losing it all.
So, when I go to the tax preparer, if he/she says that I need to file, and I do, do I need to let FAFSA know at all, or just my university? And if I need to let FAFSA know, how would I do so? Over the phone?
I don’t know about that rule about receiving financial aid.
But you didn’t know about having to file. You know now.
What did you report on 2018/19 FAFSA for your 2016 income?
For example you earned $5,000 from a job and $2,000 from work study and had $10,000 in taxable scholarships in 2016
Then on 2016 tax return you would report $17,000 in wages line with SCH $10,000 next to it to show that that was from taxable scholarships.
Then on FAFSA you would use IRS data retrieval tool and it would bring over the $17,000 AGI.
Then you would enter $2,000 for the question about money earned from need based employment. And you would enter $10,000 for the question about taxable scholarships reported in AGI.
The FAFSA would subtract that from income and only consider your income from the non work study job, so in our example $5,000.
Since that is under the income protection amount of $6,570, it would not increase the EFC calculated from parent income and assets.
Did the income not have taxes withheld? You need to locate your W2. You might have had withholding that will be credited to any taxes you owe, or if they exceed the amount you owe, you’d get a refund.
Who will do to you? The IRS? The school? Nothing, most likely.
If you want to file a late tax form, you can pull up a 2015 tax form. If you have reportable scholarships, you’ll need a 1040A, can’t use the EZ. Fill it in and take the deductions as instructed. You’ll need to have your full QEE (tuition, fees, books), subtract from the total scholarships ($11200) and that’s your unearned income. You put SCH($5900) on the line to the left of income. It will be difficult to do on hard copy; I’ve always used a tax program like turbotax or tax act because the programs know what percentage is exempt (I think the first $2k of unearned is at student’s rate, but the rest is at the kiddie tax/parent’s rate). You’ll get a $6400 personal exemption. If you have $5900 in scholarship income, plus $2500 in earned income from your job, you are looking at about $2000 in taxable income. If it is at your rate, 10%, about $200. If you didn’t have that much withheld, you will need to pay a late filing penalty and interest.
I really don’t know how you’d fix a FAFSA from 3 years ago. You’d need your school to help you with that.
I would have a professional tax preparer do it. If you are getting into kiddie tax the student shouldn’t try to do it themselves. And you need parent information too.
@kelsmom have you come across a situation like this where aid was awarded and student didn’t file tax and then student filed later?
I really don’t think the EFC would be affected at all for 2016/17 and 2017/18.
Student’s earned income was well below income protection allowance in 2015.
My EFC was a little under $4,000, but I had an internship where I made around $10,000 and my parents made a little more money… So I think it’s higher for other reasons. It looks like on my FAFSA for 2018 and 2019, which I did file, they did exclude any scholarships, although they were a part of my taxes. Or, the ones that were taxable were
And yes, I received over 20,000 and scholarships both last year and this year, not all taxable
I can’t say they won’t penalize you if the error is discovered, and if it is they won’t care that you didn’t know you were supposed to file and didn’t - that isn’t how it works. If you were audited by the IRS (and your chance very low) they would assess the taxes and penalties. It is up to you if you want to fix it. We can’t tell you if there will be a penalty or taxes owed because we don’t know your numbers.
I agree that if income and scholarships were correctly reported on the FAFSA, the EFC should not change. This is because if the scholarships are reported on FAFSA in AGI & then reported on FAFSA as scholarships, they are backed out in the formula - if anything, the increased taxes paid might actually result in a lower EFC. However, if the scholarships were not reported in AGI but were reported as scholarships, the EFC would change.
I agree that OP should go to a professional tax preparer. I do not feel comfortable providing tax advice (I have to know tax laws to the extent that I have to know them to verify students - but I don’t consider myself qualified to provide tax advice to students). But you can get a sense of what would happen by going to the IRS website & looking up the tax form and the scholarship instructions for 2015. Do the return yourself to find out if you would owe taxes, and if so, how much. The tax preparer can assist you in the filing.
I filed and paid my 2016 taxes. I had to pay because I also made a lot of money from my internship.
Again, I know the irs will fine me. I’m asking-- when I tell FAFSA about filing late, will they revoke my previous aid because I was supposed to file before and didn’t realize It? Not because my efc would change, but because I didn’t file when I should have? Are they going to revoke my aid from the last two years?