<p>Hi all,</p>
<p>It is that time of the year again. So, here we go.</p>
<p>I vaguely remember certain deductions (or negative amounts as in the case of capital loss) get added back to AGI for the purpose of FAFSA EFC calculations. Does any of the following fall in that category?</p>
<ol>
<li>capital loss</li>
<li>rental loss</li>
<li>moving expenses</li>
<li>tuition and fees</li>
</ol>
<p>Thanks</p>
<p>No, afaik you wouldn’t add anything to AGI as FAFSA asks for specific line numbers. The only tricky “add in” was the Making Work Pay credit, which got added as something else but wasn’t specified in the instructions last year. Anyway, here’s a link to the line by line instructions:</p>
<p><a href=“http://studentaid.ed.gov/students/attachments/siteresources/2011-12CTF.pdf[/url]”>http://studentaid.ed.gov/students/attachments/siteresources/2011-12CTF.pdf</a></p>
<p>AFAIK It is things that are asked about in other FAFSA questions. For instance contributions to IRAs are added back, they are asked about in another question. For this year it is question 92</p>
<p>
</code></pre>
<p>Re: including the Making Work Pay Tax Credit: In 2010-11, it was not required to be reported. In 2011-12, it is. The reason? Congress forgot to include it in the exclusions! “The exclusion of those funds from taxable income was a provision, thus far not extended, of the American Recovery and Reinvestment Act of 2009.” Once the exclusion provision expired, it had to be included as untaxed income, because that’s how it works.</p>
<p>Making Work Pay, homebuyer tax credits, moving expenses, deductible IRA/KEOGH contributions, untaxed income that is put into a 401K/403B (box 12, W2), tax-exempt interest income are the ones people most often don’t realize must be reported.</p>
<p>Do we still have the making work pay credit in 2011? In the back of my mind I am thinking that the 2% reduction in FICA replaced that. With luck they will not have caught up to that in the EFC formula.</p>
<p>edit: just checked - the formula still shows 7.65% allowance for social security taxes</p>
<p>
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<p>So, moving expenses is one item that gets added back. Doesn’t sound fair if the amount that was reimbursed by the employer is already included in W-2 wages. Does it?</p>
<p>The amount WAS in the wages, but it was removed when the credit was taken. The AGI is that much less. Putting it back in puts it on par with other things that are added into wages (and not removed by a tax credit), such as imputed income for plane trips, car expenses, and other “perks” of jobs. Not saying that I think this is necessarily fair, but it treats all of that type of income the same.</p>
<p>As for whether or not there will be a MWP credit, I seem to remember hearing there would not be. But if there is, rest assured it will be counted as untaxed income!</p>
<p>So for the purpose of ‘Simplified EFC formula’ is the limit of $49,999 based on AGI or modified AGI? My AGI would be close to $47,000, but the addition of moving expenses would bring it over $50,000. So, I’m trying to figure out under which category we would fall for the purpose of EFC calculation next year.</p>
<p>The actual AGI on the tax return is what is used for purposes of qualifying for simplied needs. </p>
<p>The problem is, it’s not just AGI that is used for SN formula. You must also satisfy one of the following: a) able to file 1040A or 1040EZ; b) someone in the household received federal means-tested benefits within the past 24 months (TANF, WIC, subsidized housing, free/reduced lunch, etc); c) at least one parent qualifies as a dislocated worker/displaced homemaker. You don’t qualify for (a), because you MUST file a 1040 due to the moving income. Unless you meet (b) or (c), you won’t qualify regardless of AGI.</p>
<p>The only thing SN does is exclude assets. Unless you have more assets than the relatively generous threshold, SN doesn’t help or hurt you.</p>
<p>Thank you for pointing that out. Yes, one parent is dislocated worker. That’s why I thought we may still qualify for simplified EFC calculation.</p>
<p>In that case … SN formula uses the AGI right from the tax return for qualification. The moving expense will still be added back into the formula but won’t affect eligibility for SN. The effect will be that assets will be ignored. </p>
<p>I do want to note that some schools … those that use Profile & those that use their own financial aid supplement form … may still count the assets for the purposes of awarding institutional aid.</p>
<p>Thank you. DS is in a school that needs CSS Profile also. So, FAFSA EFC may not matter much after all. Fingers crossed…</p>
<p>swimcatsmom - In your copied section it lists only the first $2,400 of unemployment benefits. They are taxable and I entered all of spouse’s benefits (9 months, but employed now - yeah!) on the CSS Profile form as other taxable income. Do you or does anyone know if that was wrong to list it as income for Profile? IT was a little more thatn $10,000, so it definitely makes up less needy with the unemployment. I haven’t done FAFSA yet. I did include notations on it for the Profile in the explanation section. Thanks in advance for any clarification!</p>
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<p>That was for year 2010 when first $2,400 of UI collected in 2009 was untaxed. For the subsequent years all of UI is taxable, so nothing need be reported on FAFSA under untaxed income.</p>
<p>Thanks, Arutha! I had it listed as ‘taxable income not from wages’ on Profile, then paused when I saw that part of the post. I appreciate your response.</p>
<p>Sorry, I didn’t see your post till now. Arutha gave you the correct answer though. Unemployment income is all taxable income for 2011 so is not reported separately. Even when the first 2400 was untaxable it all had to be reported. Part was already in the AGI, and the untaxed part was reported as untaxed income.</p>
<p>That “first $2400” was the Making Work Pay credit that year … the amount that no one realized had to be entered. During verification, aid officers had to add it back & EFC’s rose. Seems like there is one like this every year.</p>