<p>Is there an amount that your AGI is for your EFC to automatically be 0? Also is Social Security benefits added to AGI even though it is untaxed? Trying to help my sons friend figure out amounts etc. His parents thought they would be able to file a 1040A and their tax person told them they would be able to but when they picked up their taxes, the tax person told them because of the earned income credit they could not file a 1040A. The dad is disabled and total income is from Social Security disability and the mom only works part time. She told me their AGI is around 15,000 but was confused as to if the school would add the Soc Sec benefits to this amount. If anybody knows anything about this type of situation we would appreciate some feedback. Thanks in advance.....</p>
<p><$30k AGI qualifies for the automatic 0 EFC but they must also meet one of the other criteria (1040a/1040ez, qualify for means tested benefits, displaced worker).</p>
<p>in previous years certain untaxed income was added to the AGI if the criteria or the automatic 0 EFC was not met. The rules changed this year to where some does not have to be reported on FAFSA so is not added to the AGI. I am not quite sure if Social Security disability is one that does not have to be reported. I will go have a look on the FAFSA site.</p>
<p>I think from reading the FAFSA web site that the SS disability income does not have to be reported for 2009-2010. </p>
<p>From [Completing</a> the FAFSA 07-08/The Application Questions(78)](<a href=“http://studentaid.ed.gov/students/publications/completing_fafsa/2009_2010/ques5-2.html]Completing”>http://studentaid.ed.gov/students/publications/completing_fafsa/2009_2010/ques5-2.html)</p>
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<p>With an AGI of @ $15k the parent income will probably be low enough that that parent income will probably not have an affec on the EFC even without qualifying for the automatic 0. The benefit of the automatic 0 is that parent assets (if there are any) and student income and assets (if applicable) are also ignored. This may or may not be an issue for this family. If it is an issue then sometimes paying a bit more tax is worth it (I don’t really understand how the whole earned income credit thing works) if it reduces the EFC enough to qualify for more grant aid. Bit of a balancing act.</p>
<p>I don’t understand the whole earned income credit stuff either swimcatsmom, that’s what I was telling my friend, It really is complicated and it does look like SS disability is not included from the info you provided. YAY! </p>
<p>We’re hoping the fact they had to file the 1040 instead of the 1040A doesn’t affect the EFC, even with the low AGI. The school is requesting copies of the taxes so we’ll see. That 1040 vs 1040A and EZ is something I think should be changed. Shouldn’t matter which form is filed, if the amounts fall within the limits etc, it shouldn’t make a difference. </p>
<p>Thanks for the info, you are always so helpful and informative!! Appreciate it!</p>
<p>Either their tax person is incompetent or they misunderstood him. You can file a 1040A or a 1040EZ and take the earned income credit! It’s one of the few credits that is available for everyone, which makes sense since it is supposed to benefit the working poor! </p>
<p>FAFSA simplified EFC eligibility is based on the ability to file 1040A, even if one chose to file 1040 instead, so looks like an automatic 0 is still possible. SS disability benefits are definitely not reported on FAFSA - I called the FAFSA helpdesk to confirm when we filed this year. <a href=“http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/111408EFCFormulaGuide0910.pdf</a></p>
<p>If you cannot use Form 1040EZ, you may be able to use Form 1040A if: </p>
<p>Your income is only from wages, salaries, tips, taxable scholarships and fellowship grants, interest, or ordinary dividends, capital gain distributions, pensions, annuities, IRAs, unemployment compensation, taxable social security or railroad retirement benefits, and Alaska Permanent Fund dividends.
Your taxable income is less than $100,000
You do not itemize deductions, and
Your only adjustments to income are the IRA deduction, the student loan interest deduction, the educator expenses deduction, and the tuition and fees deduction. </p>
<p>If you file Form 1040A, the only credits you can claim are the credit for child and dependent care expenses, the earned income credit, the credit for the elderly or the disabled, education credits, the child tax credit, the additional child tax credit, and the retirement savings contribution credit. </p>
<p>[Tax</a> Topics - Topic 352 Which Form – 1040, 1040A or 1040EZ?](<a href=“http://www.irs.gov/taxtopics/tc352.html]Tax”>http://www.irs.gov/taxtopics/tc352.html)</p>
<p>It’s not a problem if they filed a 1040 — what matters is IF THEY COULD HAVE FILED a 1040A or 1040EZ. Look at the link in the post above to determine this. My experience is that most low income families are eligible to file a 1040A or 1040EZ unless they have business or farm income - in that case, they must file a 1040. It won’t matter, though, if they received federal means tested benefits (this allows the automatic 0 or simplifed needs analysis even if the 1040 had to be used).</p>
<p>Social security income is not reported. NOTE: Never include anything in AGI on the FAFSA that is not actually included in AGI on the tax form! If you are claiming income that was not reported on a tax form but must be reported on the FAFSA, you put it in untaxed income.</p>
<p>sk8rmom-I too was thinking the earned income credit should not have prevented them from filing a 1040A but didn’t know for sure, that just didnt sound right to me. I think and I’ll have to check with her, but I think she mentioned she worked from home briefly for a company and received a 1099 BUT her tax person told her that wasn’t the problem, it was the EIC that made her not able to file the 1040A. The work at home job she had was only temporary, but she said she made enough to receive the 1099 for the income. Even with that though I can’t see how that would change anything with the AGI still being that amount. We’ll see once she hears back from the school. Thanks for the helpful info! </p>
<p>kelsmom-Kinda weird that her tax person didn’t mention anything about business income preventing them from filing 1040A, said she kept harping on the EIC. If the small amount of income she made from working that temporary job from home affects the way the school computes things, that would be a shame especially with their AGI the amount it is. Will be interesting to see what the school says. Thanks for your input.</p>
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If that’s what her tax person told her, she needs a new one.</p>
<p><a href=“http://www.irs.gov/pub/irs-pdf/f1040a.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/f1040a.pdf</a>. Look at the second page … EIC.</p>
<p>If she had federal means tested benefits of any kind in the past two years … or if anyone in her household did (including free/reduced lunch), the 1040 rule isn’t necessary. She’d qualify for automatic 0 EFC based on that.</p>
<p>I am sick of incompetent tax preparers!! I spent 2 hours yesterday talking to a student & her tax preparer about the fact that the student needs to submit an amended tax return. She included $17k in scholarship/grant income on her verification worksheet. Her tax return did not list any income from scholarships/grants.</p>
<p>Her tax preparer called me and gave me a hard time. She told me we did not send the student a 1099 or a W2, so she is not required to claim anything (!). I explained that we sent her a 1098-T which is used to determine the taxable portion of her scholarships and grants. The preparer asked me how I knew she had the scholarships/grants - you would be proud of me — I didn’t say what I wanted to say (Well, idiot, we are the ones who give them to her). I simply explained that she is required to file an amended return in order for me to give her aid. The preparer said, “I would guess you have a lot of students who don’t claim this as income on their taxes. How come you don’t go after them?” Wow, huh?! I told her that the student listed her scholarships/grants on her verification worksheet & there is no amount on her tax form. Because I am required by law to resolve any conflicting information, I cannot ignore the situation. Later, the student called and asked me for a copy of the verification worksheet she had turned in.</p>
<p>What a huge waste of my time … and what an unfortunate excuse for a tax preparer. But don’t even get me started on the ones who fill out separate returns for husband & wife listing both as head of household. People get mad at me when I tell them it’s not legal & insist on an amended return for one of them … you’d think I was making up the law on the spot, just to make them mad.</p>
<p>kelsmom: I have great sympathy. I have people bring me their previous year tax return and when I tell them the problems, they claim I’m making it up. I think there should be a qualifying exam to be a tax preparer.</p>
<p>wait a minute, what school is giving a student 17K in taxable scholarships. I don’t know what school Kelsmom works at, but that seems like a lot of money above the COA. I can understand including it as income on the verification and not putting in on the tax return creates a conflict, but maybe the student shouldn’t have reported it as income on the verification as income.</p>
<p>My understanding is that SSDI is reported on the FAFSA (but depending on your family income some of it may be untaxed). Receiving SSDI does Not qualify for O EFC.</p>
<p>SSI is not reported and can be the means for qualifying for automatic 0 EFC. </p>
<p>Also scholarship/grant income for tuition, fees, and books is not taxable, but if it is used for food and housing than that part is taxable.</p>
<p>Please Correct me fast if I’m wrong but thats what my accountant, FAFSA, and CSS Profile said</p>
<p>No, she didn’t have $17k in taxable scholarships. She just wrote that down — it’s a very common mistake — that’s what she got in total. Only the amount exceeding tuition & fees is taxable, about $7.5k. </p>
<p>When students put an amount for taxable scholarships on the worksheet, I pull up their f/a info. What I usually find is that they are putting their total aid (yes, including loans), and they don’t need to put anything there (because they don’t usually have enough that any is taxable). I just ignore the amount on the verification worksheet if it’s wrong. They don’t put it on the 1040 incorrectly - just on the verification worksheet, because they don’t actually read the question very carefully.</p>
<p>We specifically ask them to report the amount claimed on the 1040 that is attributed to taxable schol/grants - because that’s the old Worksheet C stuff - it’s actually not considered in income for f/a purposes.</p>
<p>Kelsmom, that must be the same tax preparer that many of Obama’s cabinet nominees use. ;)</p>
<p>Are all schools required to issue 1098-T’s to recipients of grants & scholarships?</p>
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<p>jazzie, mystery solved…her 1099 income (probably over $600 if a form was issued) DOES make a difference. She’s not eligible for 1040A or EZ with self-employment income and MUST file a 1040. This would disqualify her for the Automatic 0 EFC, but not the Simplified Needs. So, with assets excluded and an AGI of $15K, she should have a 0 EFC anyway.</p>
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<p>ncmentor, no UNTAXED SS benefits, including SSDI, are reportable on the 09/10 FAFSA, that was a change made last year. FAFSA question 47i specifically excludes these from income. </p>
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<p>Generally, yes, there are limited exceptions (certain gov’t/veteran benefits, students who are non-resident aliens).</p>
<p>The level of technical expertise displayed here is breathtaking. All contributors deserve thanks.</p>
<p>Moneycoach, we post them online for students. My D’s school sends them in the mail. One way or another, the school has to provide you the info.</p>
<p>Does it make sense that a student would received grant/scholarship money because of need, then make it taxable? Am I missing something?</p>
<p>Yes it is strange. Only the part in excess of qualified expenses (tuition/fees mostly) is taxable. But it has always seemed strange to me. My daughter gets hit even worse with State taxes on her scholarships/grants than with federal taxes. Still it is nicer to have the grants/scholarships and pay the taxes than not have the grants/scholarships.</p>