<p>my parents don't really work nor earn a salary... at all.
but... their taxes are negative (-18,000) is that even possible?</p>
<p>What do they live on? Where did the negative number come from?</p>
<p>No such thing as negative taxes, really. You could end up with a refund due if they overpaid estimated taxes, but from what you say, that’s not likely the case. Somebody did the math wrong, I suspect.</p>
<p>Can an Earned Income Credit resulting in a tax refund be viewed as a “negative tax?”</p>
<p>You have to “earn” the income to get that credit. You don’t get it for disability checks or investment earnings.</p>
<p>I’m not sure how you can have “negative taxes” if you don’t earn any money and you don’t work. If that were the case, you would also have paid no taxes. If you paid nothing, you would not get a refund of any sort. </p>
<p>What makes you think your parents have “negative taxes”. And where did the $18,000 number come from?</p>
<p>Alaska? 10</p>
<p>It’s easy to have negative taxes at any income level. It just means that you are getting a refund. Not enough info to figure out the OP’s situation. Are parents on disablity, pensions, investments, annuities? We just know they are not working.</p>
<p>Are you sure it’s the taxes that are negative? You may be looking at the adjusted gross income (AGI), which can be negative if your parents claimed certain losses on their taxes.</p>
<p>yeah… sorry i didn’t specify.. im from chicago.. and i was talking about the adjusted gross income(AGI) i just generally think of the AGI as taxes, but i guess there is a difference.</p>
<p>There is an enormous difference between the AGI and taxes.</p>
<p>I am going to assume your parents file a 1040, because I would think there must be some underlying reason their info is so odd. What line of the 1040 is this negative number on? I don’t know if you saw it or if they just told you, but if you can tell us what line it’s on, we might be able to ask a few more questions & figure this thing out!</p>
<p>The AGI could be negative. I can think of several scenarios where that could occur.</p>
<p>Perhaps the AGI could be negative, but I’m not sure how this would affect the financial aid application. I believe the “lowest” you can go is zero income. And if you do that there will be a question re: how you pay the family bills…a zero income would be somewhat of a red flag, I would guess.</p>
<p>I think there will be a lot of negative AGI this year from people who have made significant money in the past and whose lifestyles cost more than what they are currently making in today’s economic crisis. The way they are paying their bills is probably on borrowed money. (If they are able to get any…)</p>
<p>A lot of people with a negative AGI this year? I doubt it. Look at the definition of AGI: gross income minus above-the-line deductions. Gross income is rarely negative for individuals. Above-the-line deductions include moving expenses, HSA deductions, alimony, one-half of self-employment tax, penalties on early withdrawal of savings, IRA contributions and interest on student loans. If my income were extremely low, I probably wouldn’t be making discretionary investments in an IRA or HSA that would push my AGI into the negative territory.</p>
<p>What might very well push taxable income into the negative territory is itemized deductions, such as home mortgage interest, property taxes and medical expenses. However, taxable income is irrelevant in the calculation of EFC by FAFSA.</p>
<p>Even in the case of a negative AGI, I’m wondering if a negative value can be entered on FAFSA, as Thumper mentions below.</p>
<p>From finaid.org:</p>
<p>If your AGI is zero and income earned from work is non-zero, the federal processor will assume that the AGI value was an error and will substitute income earned from work. If this occurs, talk to the financial aid administrator at your school and ask for an assumption override.</p>
<p>The original poster’s case would seem to be an exception since earned income from work sounds like it’s zero as well.</p>
<p>Most likely, you will only find the taxable income resulting in a negative figure…which is highly possible for low-income households and those who have substantial itemized deductions. </p>
<p>Negative numbers can be entered on the FAFSA. It may produce a red-flag with the school, but it is truly possible for several of the reported tax figures to be a negative number. However, even if the FAFSA defaults the figure to zero (as vball’s post suggests…though I have NEVER seen this happen in real life and we get a lot of processed FAFSA’s in my office), your EFC would still be zero…and the EFC cannot be anything less than zero.</p>
<p>They could have brought up to page 1 a schedule C business loss to start with a negative number</p>
<p>very true, somemom.</p>
<p>I don’t see the issue. There are folks with negative incomes on tax returns. See it all of the time.</p>