<p>I have used the search function on this forum and also googled for some websites, but I am still having problems. :( I would really appreciate it if the parents on here could help.</p>
<p>This is my second year filling out the FAFSA. It was processed a week ago, but I am trying to understand why our EFC this year is almost 6 times that of last year. This year, my father's income, my mother's income, my parents' total amount from worksheet A, and their total amount of cash/savings/checking accounts are all lower. My finances remain the same. The most significant changes seem to be that this year we used the 1040 instead of the 1040A, and that in 2007 my parents invested in a Roth IRA for the first time. I am wondering how would that affect my parents' AGI and EFC?</p>
<p>I admittedly do not know much about filing taxes or the Roth IRA, so once again, thank you for your help!</p>
<p>The only way that a Roth IRA would affect AGI would be if they did a Roth conversion which means that they converted an existing IRA into a Roth. Under those circumstances the total amount is included in the AGI because the existing IRA had been pre-tax. </p>
<p>However, a simple contribution to a Roth has absolutely no affect on your EFC. Even if you put the amounts on the wrong line because of limits to Roth contributions there would be no way that this would increase your EFC to 6 times previous amounts.</p>
<p>If you were eligible to file a 1040A for the 2007 FAFSA AND your parents had earned income of less than 50,000 you would have qualified for the simplified means test -- so all assets would have been disregarded. By needing to file the 1040 this year, assets would count. </p>
<p>Another possiblity -- did student income and/or assets increase? These are considered at a much higher rate than parental income or assets.</p>