<p>Please help a fin aid newbie!</p>
<p>I've completed the Profile form but I still have a question about income. Adjusted gross income is easy enough to understand, but what do they mean by parents' "income earned from work?" </p>
<p>I just used the gross income before taxes (such as year-to-date gross income on my year end pay stub).</p>
<p>Could anyone confirm this for me?</p>
<p>Some people have income not earned from work that would be included in AGI. Example, profits from sale of appreciated property. Profile is looking for wages and salary information only in that question, so "income earned from work." In the case of a person who only has income from wages/salary, then the two numbers are the same.</p>
<p>So the two figures--AGI and income earned from work--should be the same if you don't have any investment income?</p>
<p>For the fafsa and profile:
Although they dont look like it, for tax filers these are expense question, in which case the only purpose of these question is to compute how much social security tax you paid and to see whether you qualify for the employment allowance. Therefore, you want these numbers to be as high as possible.. Include everything: wages from line 7 on the 1040, deferred 401k,tax deferred annuities, (12a-d on your W-2), plus if applicable business and farm income from schedules C and F (lines 12 and 18 on the 1040), or combat pay.</p>
<p>dags pretty much has it right. FAFSA and Profile calculate the social security tax from this question, then subtract it from your income automatically.</p>
<p>And I see that dags has been reading my favorite reference on financial aid: "Paying for College Without Going Broke" by Princeton Review. :)</p>
<p>Thanks dags and Sblake7--I do have a copy of Paying for College Without Going Broke and forgot that it had this chapter in it. The step-by-step instructions are great!</p>
<p>Where would I be with CC? Thanks again!</p>
<p>Get the current version-- 2007. It changes a bit every year, and it's well worth the $14 or whatever it is. Amazon.com.</p>
<p>I re-read the 2006 Paying for College Without Going Broke--looks like I add my AGI and contributions to 401(k) {nothing else on w-2 applies, nor do I file Schedules C or F} to get the "income from work" figure. Thanks loads, guys, I appreciate it. This was keeping me awake.</p>
<p>For those of you wondering, this book gives step-by-step instructions on how to fill out both forms, with lots of background information on each section. It's definately worth the cost.</p>
<p>whoa.... I'm pretty sure you NEVER have to put the Actual Salary down on any of those forms. I (the parent) made 64K this year, but after health insurance and retirement is taken out (before taxes are calculated) the actual 'income' is about 50K. This is earned income. Adjusted gross income includes interest and dividends and unearned income. The fafsa does ask for how much I put in retirement (which was about 9K).</p>
<p>The "income from work" question is asked to determine how much you paid in Social Security tax. That amount is automatically calculated by the formula, and deducted from your available income. So the higher the better in response to this question.</p>
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whoa.... I'm pretty sure you NEVER have to put the Actual Salary down on any of those forms. I (the parent) made 64K this year, but after health insurance and retirement is taken out (before taxes are calculated) the actual 'income' is about 50K.
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<p>Health insurance? I don't see where that can be deducted. Am I missing something?</p>
<p>You don't actually "deduct" the cost of health insurance. You can have your premiums taken out of your pay in before-tax dollars, which does reduce your pay so it's not reportable as "income from work." Unlike payments to 401(k)s, the forms don't ask you to add that back into your pay, so the premiums aren't counted as income.</p>
<p>Self employed can deduct health insurance premiums from total income, thereby reducing their AGI.</p>
<p>Thanks Chedva and sblake7. I got excited for a moment there. On a retirement income it would sure have been nice to have been able to deduct those health insurance costs. Thought it was to good to be true.</p>