<p>So I thought all the paperwork was done... still waiting for two financial aid results from colleges in the next couple of days. Then today I found out that I am probably going to have to refile my 2012 taxes. :eek: I have been the beneficiary of an estate in the past, and the estate will be filing a "final return" for 2012 with a very large loss that can be taken on personal returns by the beneficiaries. Talking somewhere upwards of a $70,000 loss! I haven't got the K-1 in hand yet, and probably won't have it for several weeks, so I can't tell the exact impact on my return. But I am guessing my tax burden is going to go waaayyyy down, and I may get another $10,000 or so back in refund. It might be possible to carry the loss forward somehow, but I am not sure yet.</p>
<p>Wonderful news in most years... but what does it mean for FA? If I refile & my AGI drops, and I get a whopper of a tax refund, will that tax refund be counted as income somehow? I assume I need to tell the colleges and send them the revised returns once they are complete. But that may not be for some time... Anyone have any thoughts?</p>
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No tax refunds don’t count as income.</p>
<p>The amount of taxes paid reduces EFC, but your income will be going down, too. Hopefully this gets you a better offer.</p>
<p>Well… it is not a “real” income reduction, I think. This is a paper loss. I still took in the same amount of wages, interest, dividends, etc. So I figured that would not help me. Plus, I think this could take so long that any money they have to give out will be depleted by the time I could get revised returns to them. Feeling a little frustrated with the estate attorneys at the moment… they could have mentioned this months ago.</p>
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<p>Well, that is good news. But… it would increase our assets, right? Maybe not enough to make a big difference, though.</p>
<p>Excess deductions on termination are a miscellaneous itemized deduction subject to the 2% floor on your 1040. They won’t have any effect on your AGI.</p>
<p>A tax refund is not income. However, the tax is an allowance that reduces income used in calculating the EFC. So lower taxes means more income available for the EFC. However,* if* your AGI will be lower that means less money available for the EFC. So in that case, I would expect your EFC to be lower. (for FAFSA - who knows how CSS would treat it). (</p>
<p>No, a refund will not increase your assets. Not for the current year anyway. Assets for FAFSA are “locked in” as of the day you originally filed FAFSA.</p>
<p>Have the exact same thing with a K-1 ours is over $100,000 loss, didnt know about it until last month after all financial aid stuff sent in, refiling has to be done manually and takes over 6 weeks was told. Also we are at a profile school so Im worried they will look at that $100,000 as income. Very frustrating</p>
<p>Very confused about how they would look at it as income… it isn’t like I got $70K in distributions from the estate! The estate had assets when it started, and lost them (housing bubble - POP!). So I can’t see how they would consider it as income. I could see how they might ignore the impact, since it is a “paper” loss… and still consider my wages, interest, dividends, etc. just as they did before. In reality I did not take in any more or less money than they have already seen. All of D’s schools are also profile schools.</p>
<p>Okay, so I got the K-1 today. I plugged it into a copy of my already-filed Turbotax return to see what happened. My AGI is unchanged, but my itemized deductions are a lot higher. The net change to my taxes (federal and state together) is about a $4,000 additional refund. So I will be refiling… still not sure if the schools will change the FA (all profile schools). Sounds like they might, as I paid about $4,000 less in taxes than expected this year… I am going to wait until the new returns are done to contact them, though.</p>
<p>Thought I would come back and report the bad news on the result of this. Although I STILL don’t have my refund from the feds (an addition $2,000 due back) or the state (the state has at least acknowledged the amount they owe, but no check or deposit yet), I got a bill from D2’s college today for an extra ~$1,000. Essentially they are taking 46% of the amount my federal tax burden was reduced by last yea due to the loss. I am quite crabby about this for a couple of reasons.</p>
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<li><p>I left them a message a couple of months ago after I re-filed. Asked if I needed to send them the amended version. No one ever called me back… but a couple months later I was talking to someone in FA, and the good citizen in me felt obligated to mention it again (stupid ‘good citizen’, not listening to her again!). They said they would like to see it. So I sent it… and they reduced her grant money for fall and winter and sent me the bill.</p></li>
<li><p>My AGI is MUCH lower in 2013, and my FAFSA they already have reflects it. Under $50K this year… so they know my income has been down AND that I don’t have the refund in hand. :(</p></li>
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<p>Oh, and they sent the FA adjustment info to D’s school mailbox, and she neglected to mention this in spite of numerous reminders to forward any FA info to me… I think she figured they would also send one to our house, which they did not (back to the darned FERPA issues again, I guess). I figured out as soon as I saw it what the issue was… but now I can also look forward to a protracted struggle to get them to send copies of the FA info to our house (funny that they have no trouble sending the bill here!).</p>
<p>And the kicker today. The financial aid office told me that “if someone mentions they have an amended return, our policy is to ask them to send it to us.” So there is no written rule on their website or in their FA materials saying that an amended return has to be provided to them. I asked them to clarify that this is the case, and they agreed that is true. No good deed goes unpunished…</p>