Hi AGI 42596. Total tax 2539 and 401k contribution 2431. The school said I need to check with tax consultant. I cannot afford one. In my bracket you only need to contribute $2000 to get the $200 credit on form8880. I called the FAoffice and they said the amount comes from drt and they didn’t adjust it. But The amo una want there twice where i did the DRT after I filed my taxes.
The fafsa formula can be done manually at this link:
http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf
There are other factors besides the ones I mentioned, those were just examples, so you can figure it out manually.
If you are saying you didn’t get any extra credit or pay less tax because of the 8880 double counting, then I’m not enough of an expert to tell you whether or not to amend. It appears amending wouldn’t cause additional tax but would make things correct and may make getting the fafsa straightened out easier.
Yes, 94a would come from the DRT. I don’t think 94b would come from the 8880 via the DRT but I don’t know for sure. That duplicate amount needs to be removed, but by whom depends on whether the fafsa was selected for verification or not. You haven’t answered whether it was. And your last sentence isn’t readable but you may need to talk to someone higher up in the FA office and in more detail to get this resolved.
Hi yes it was selected for verification. The last sentence should’ve read that the amount of contribution wasn’t on the SAR twice until the school submitted correction. It didn’t appear when I used DRT for my return in March or when I did DRT for sons return. It only shoeed up in correction on SAR after school submitted correction to fafsa.
But the school says they didn’t make the change? I think you need to talk to someone higher up in the office. You’re probably going to have to amend the return and then get a tax transcript after the amended return is processed. After amending a return you can’t use the DRT. That’s going to take some time. The FA office isn’t going to give you tax advice but someone there should be able to tell you what needs to happen to get the extra contribution removed from the fafsa. Explain it thoroughly. Sometimes email will work better than a phone call as it may be directed to a more knowledgeable person.
And it is worth it to keep plugging along. He might not get the Pell grant before Sept 1, but if it is an error and he does qualify, they will give it to you when things are straightened out. Maybe getting that $800 in February will be a nice surprise to get him through the spring semester.
So if I’m following, you ONLY had a 401k contribution (no IRA) and the Saver Credit of $200 based on the 401k? But on your FAFSA it is showing the $2431 contribution to the 401k as both a 401k on line 94a and as a IRA contribution on line 94b? That doesn’t sound to me like there is anything wrong with your taxes, just that line 94b needs to be corrected (the entry eliminated). Is that correct? Does the Saver Credit (and form 8880) even appear on the FAFSA?
So on form 8880, did you put $2431 on lines 1 for IRA and on line 2 for a 401k, adding the two to $4862? Did you calculate your Saver Credit based on $2431 or $4862? If the latter, then you need to do a tax correction. It may not make a difference, but you should correct it. If you only used $2431 and you put it on line 1 instead of line 2, it makes no difference in the credit, but ask the IRS if you need to correct.
For the FAFSA, they should see that you only had one account, the 401k. Line 94b needs to be corrected to $0. As Annoyingdad said, the issue is does your school want you making corrections now, as if you make a change, that will probably start the verification process all over. If the school makes it, you can just go on. I was instructed to NOT TOUCH the FAFSA once the verification process or appeal process started.
The OP said she entered the 401k amount on both lines 1 and 2 of the 8880. So while she didn’t benefit from that double amount, it is incorrect. See post #17.
I just looked at form 8880 and I don’t think it makes a difference if you DID double the contribution to $4862 because the maximum toward the credit is $2000 (you would have reduce the $48xx to $2000, or you would have reduced the $2461 to $2000) Either way, you used the multiplier to 0.1 and got a $200 credit. No tax owed or refunded.
So, the only issue is do you have to change the tax forms so the DRT works, or will the school accept a tax transcript showing it was a 401k account (line 94a) not an IRA account (line 94b).
The tax transcript may show both amounts from the 8880 if not amended. Not sure of everything that’s on the tax transcript. After amending, the DRT won’t be available. I don’t think it’s published where the DRT can get it’s info from, maybe it can use the 8880. In the end, since the fafsa was selected for verification, the school needs to tell the OP what they need to get the amount off 94b, since it was an error.
Bad news for me. I thought the same thing as twoinanddone, but when I did a dummy return, I now owe over$600. Adding it twice lowered my AGI. List shoot me now.