<p>I was calculating my EFC on Collegeboard (using institutional methodology), and i put in all my info, and got a number i liked. the problem is that i looked in the detailed summary of it, and what i saw bothers me.</p>
<p>what it did was it took my parents adjusted gross income and added it to their untaxed income to determine our total income, which is normal. then it had a list of allowances, which included this such as income tax, and subtracted it from our total income, which makes sense. but when i looked at the list of allowances, it included FICA (social security) taxes as an allowance. and to my understanding FICA is not included in adjusted gross income, so i wonder if its wrong that its counted as an allowance, or if theres an allowance for FICA taxes for the purposes of financial aid.</p>
<p>ill restate in case my explanation was kinda unclear. total income in my family is adjusted gross income plus untaxed income. allowances are given for income, such as taxes. an allowance however was made for FICA taxes, which arent included in adjusted gross income anyways, so should i be concerned? im worried because i liked the number i got, but im afraid its artificially low cuz collegeboard put allowances that dont exist. </p>
<p>FICA exists - ask your parents to see their pay stub - FICA is a big deduction (for my kids it actually far exceeds their federal taxes). Yes it is a legitimate allowance. The AGI is a pretax figure. Actual taxes and an allowance for FICA (s/b based on a % - @ 6.75 I think - of income from work only) are deducted from the AGI as part of the calculation to arrive at available income.</p>
<p>my parents have never heard of FICA taxes, and my dad always talks about paying for social security, which he describes as being the tax that eats away at ur paycheck before you ever see it, and so is not included in adjusted gross income. and they seem sorta the same, so naturally, i presume that FICA taxes and paying for social security are the same thing.</p>
<p>the thing is that i dont see any indication of FICA taxes on my parent’s tax returns, so i have no reason to believe that its ever included in the adjusted gross income in the first place. what concerns me then that since an allowance is automatically made for FICA taxes on collegeboard’s institutional methodology calculator, that im receiving more allowances than i will, and thus potentially ruining what i thought to be a good efc. </p>
<p>i mean, how accurate is collegeboard’s efc figure to what people pay at schools that cover all need? anyone have any experiences with this?</p>
<p>FICA = Federal Insurance Contributions Act = they are the deductions for social security. They do not appear on the federal tax return (except for self employed people). They are a deduction from a paycheck based on the money earned working at a job. As they do not appear on the tax return an allowance is made for FICA deductions in financial aid calculations, based on income earned from a job x a % .</p>
<p>The EFC calculated by the IM is only a guideline as each school that use CSS has their own different way of dealing with certain information. For instance home equity may be considered as an asset in calculating need by some schools, while for others it may not. While the IM EFC will not be the same for all schools, the FAFSA EFC, on which federal aid is based, is the same for all schools. (The FAFSA EFC formula also includes an allowance for FICA).</p>
<p>The FICA contribution IS your social security contribution unless you are self employed. If you are self employed, you pay these yourself as self employment taxes.</p>
<p>Swimcats is absolutely correct. There is no sense fixating on this issue. The Profile collects financial data and sends it to the colleges that use the Profile. Those colleges use that information ANY WAY THEY CHOOSE to distribute their money (institutional funds). The formulas they use vary wildly. The Profile does not give you an “EFC” like the FAFSA does.</p>
<p>see, i can understand it if a FICA allowance was made if it asked for ones total income, but it asks for adjusted gross income, which doesnt include FICA in the first place. so im still trying to understand if theres a FICA allowance when adjusting to figure out adjusted gross income since adjusted gross income doesnt include FICA taxes at all since that money is already deducted from ones paycheck.</p>
<p>and anyways i am of course just using the IM method on collegeboard to see a ballpark range of what id have to pay at a private.</p>
<p>I’m pretty sure that the adjusted gross does include the amount paid for FICA. It is deducted automatically from the paycheck, but it is also part of the total income that constitutes the AGI.</p>
<p>Ditto. Do not worry. AGI (if you’ve entered correctly from tax form 1040) DOES include FICA. Your folks <em>do not likely</em> take home the pay that is stated on the tax form (unless they’re self employed as mentioned above)…they actually will “take home” that amount less FICA (and state and city taxes etc.)</p>
<p>Now, if you’ve arrived at the AGI through some self-designed formula NOT based on 1040s + addl info or NOT relating to income shown on a W2, that’s another matter. As long as you entered the info according to the tax boxes on the return etc. then the calculator is correct in allowing the FICA reduction against your expected percentage of income contribution. Make sense?
Cheers,
K</p>
<p>Ditto. Do not worry. AGI (if you’ve entered correctly from boxes on tax form 1040) DOES include FICA. Your folks <em>do not likely</em> take home the pay that is stated on the tax form (unless they’re self employed as mentioned above)…they actually will “take home” that amount less FICA (and state and city taxes etc.)</p>
<p>Now, if you’ve arrived at the AGI through some self-designed formula NOT based on 1040s + addl info or NOT relating to income shown on a W2, that’s another matter. As long as you entered the info according to the tax boxes on the return etc. then the calculator is correct in allowing the FICA reduction against your expected percentage of income contribution. Make sense?
Cheers,
K</p>
<p>Calreader is right. FICA is included in AGI. The problem I have is running the IM calculator on collegeboard.com and finaid.org. Guess what? all input being equal the difference in EFC I get is more then $10K!!!
So mahbobbylou may have a point being concerned ( and I am , too)…Has anybody run calcs on different sites and compared to actual FA numbers awarded? Which one is the most accurate?</p>
<p>hmm, yeah, thats what i wanna know. is the collegeboard efc relatively similar to that of need based top privates? since the efc i get on finaid.org is like 10k more than mine on collegeboard -__-.</p>
<p>hmm, then im still trying to understand why my parents adjusted gross income is a little over 10k less than the sum of their base salaries minus their retirement contributions. is this maybe because of property tax? is property tax something thats deducted before adjusted gross income is calculated? since i dont see an allowance for that on collegeboards formula.</p>
<p>As far as I know property tax is not deducted from the salary. It is something you pay either as part of your mortgage or you pay separately to the city. Since EFC formulas do not consider how much is you mortgage I doubt they will care what your property tax is. It could as well be that finaid.org calc doesn’t adjust for FICA. Anybody?</p>
<p>There is no separate allowance made for property taxes in the FAFSA EFC formula. In the FAFSA EFC formula there is a protected income allowance which includes allowances for expenses such as housing (including property taxes), food, medical etc. The allowances are based on number in family and number in college not what you actually pay. Don’t know about the CSS formula but I would imagine it has a similar income protection in the formula.</p>
<p>Finaid.org does allow for FICA on the FAFSA EFC calculation. Bear in mind that the finaid calculators have not been updated to reflect any changes in the 2009-2010 EFC formulas. A shame as they were usually very accurate in the past.</p>
<p>The IM does not produce an EFC as such, it just provided information to schools which they all schools use according to their own formulas. The numbers each school comes up with may vary enormously based on how they treat the information. All you can do is wait and see what your aid offers are.</p>