We were selected for verification this year. (I’ll guess because we went from 2 to 1 in college, from 4 t 3 in the household, and as a result, our EFC is much different this year than last.)
D does not get a 1098 because her scholarships and grants exceed QEE. I used the itemized college statement and the receipts for text books to determine the amount of taxable scholarship. This amount went on the 1040EZ (used Turbo Tax, if that matters). On the FAFSA, the college increased the amount of the taxable scholarship by the amount of books. Why?
The AGI remains unchanged because that was pulled over from the DRT. The college has no idea what we spent for books and other mandatory supplies, which are QEE and if we used scholarship money to pay for, means that amount will not be subject to tax. What regulation stipulates the college changes the amount of scholarship?
Other details (that probably don’t matter). I used a 529 to pay the balance due, so there’s no moving money around to claim the AOTC. EFC went up by a very small amount. None of d’s aid is need-based, so the change in EFC has no affect on us.
I have no idea what happened. It seems odd to me. I don’t ever mess with the numbers people report for their taxable portion of grants/scholarships, and I don’t know why I would need to do that. Since it didn’t affect your aid at all, I wouldn’t worry about it. But I agree that it seems strange. My brother had an odd change on his D’s info one year for taxable grants/scholarships - it wasn’t the same as yours, but it also made the EFC rise a bit. I disagreed with the reason the school made the change, but they insisted to my brother that they did what they were supposed to do. For his D, it made a small difference … but not enough in the scheme of things to worry about (she has full tuition & gets to keep Pell as a refund - he is so happy with her overall aid package that he figured it wasn’t worth getting upset over).
That’s kind of our situation–full tuition covered by tuition exchange (school keeps Gear Up, in accordance to policies most schools in the exchange group have regarding state/fed aid) and she gets to apply her renewable outside scholarship towards fees, room, and board. None is need based. The state awarded Gear Up to all participants going to college from a Gear Up program high school (school has high percentage of free reduced lunch students, but all student in a grade are participants regardless of income).
So, makes no difference in the long run, but struck me as weird.
I don’t understand, what number was changed? If the taxable scholarships were part of AGI and income from working, but then were excluded in line 44d, doesn’t it cancel each other out?
The only way they would know the amount of scholarships is from the tax return, right?
Are her taxable scholarships more than $6300? Is she your dependent for taxes?
Yes, my dependent for taxes (has to be or she won’t qualify for exchange). AGI remains unchanged at under $6300. That was pulled over from DRT, so can,t change, just the line that asks how much of income was from taxable scholarships was changed. Higher scholarship would mean less $ from work, so less of a SS allowance from the calculation. That’s probably the reason for the increase in efc.
I think what was done is that the school subtracted scholarship from directly billable QEE and used that number. Never mind that the kid had to buy books. And it,s not like I claimed an exhorbant amount for books, just around $800 for two semesters, under what’s figured in the COA!
Just weird, and apparently not something that happens to very many people.
Well I would call and ask them about that. So your D had work income and taxable scholarship income.
The amount in line 44d is supposed to be the amount of taxable scholarships that was included in AGI.
So if they change that number and it does not match what your D actually reported on her tax return under SCH, then that is not right.
You could send them a copy of D’s tax return where SCH and amount is listed in wages line.
For example your D had $3k W2 income, $3k taxable scholarships. AGI and income from working is $6k.
line 44d would list $3k for taxable scholarships. That’s what is reported on tax return.
So you are saying they reduced the amount in line 44d by $800?
By them subtracting only $2200 (my example #) from the total $6k they make it seem that your D had a higher income. $3.3k instead if $3k ( my example).
If AGI remains the same, an increase in the amount that is a taxable scholarship would mean the amount coming from work would decrease. Which makes not sense, as obviously, there’s a W2 with the amount earned printed right on it!
Did you have to send the W2 to the college? I thought you said the college reduced the amount of the taxable scholarship? With the DRT the only thing they would know from the tax return is the AGI, right since your D didn’t owe any tax?
Another question, I know I was confused by this and asked @kelsmom for help.
On the FAFSA, did you make sure that the AGI and the income from working were the same number (W2 income and taxable scholarship added together), then in line 44d is that amount the amount they changed?
For example my D had W2 income of $3k and taxable scholarship income of $4k.
So on FAFSA AGI is $7k and income from working is $7k, in line 44d I put $4k of taxable scholarship.
Line 44d is subtracted from income from working, so the income considered for FAFSA calculation is $7k - line 44d amount of $4k = $3k which is W2 income.
The EFC should not have been impacted in your case by a change they made on the taxable scholarship amount since your D’s income was under the student $6300 income protection allowance.
Didn’t send college my W2s. Nope, in OP, college increased amount of taxable scholarship. Used Turbo tax, so they did the adding. All taxes paid refunded as total income (earned and scholarship) were under standard deduction. It’s just an odd correction. Aid should remain unchanged, so I’ll just shrug, move on, and expect the same next year.
Ok, I just don’t understand what they would base the change on if they don’t know the W2 income, just AGI.
But your D’s total income on FAFSA is under $6300 you said, so her EFC should not have been impacted by the change, her EFC should just be based on her assets. And your EFC should not have been impacted either by this.
I would think the biggest change in EFC would be from household size and students in college if assets and income stayed the same.