<p>on another thread…you say that your parents get quite a large distribution from retirement. Is that so? </p>
<p>*
[“Pensions and annuities” (51,836)] - [“Taxable amount” (15,918)] = 51836-15918 = 35918*</p>
<p>So, your parents get about $52k from retirement? Plus, the income from 16k income from wages?</p>
<p>Is eligibility for free lunch only based on income from wages? Doesn’t income from retirement come into consideration at all?</p>
<p>How many members are in your family?</p>
<p>Why does it matter where the other 24k come from?
When I said 16K, I meant 19K.</p>
<p>Total “pensions and annuities” is about 50k, and the taxable amount is $15k.</p>
<p>19k+15k = 34k</p>
<p>I don’t remember where the other 6k came from (I’m at school right now) meaning it likely wasn’t noted in the FAFSA, otherwise I’d remember it.</p>
<p>The only two figures I remember editing is the work income and the pension income. I corrected my nontaxable pension income by changing it from $0 to $36K and it directly caused my EFC to shoot up the most. </p>
<p>My dad isn’t retired…he is still working. I don’t know much about what he does (although I know he works in a restaurant and times haven’t been particularly good), but he still does the job. We have always been making around $16k a year from work alone, which is why we have free school lunch. </p>
<p>There are 5 members in my family: me, my brother, my two parents, and my grandparent. All of this is unnecessary because I’ve already figured out that the $35k in “nontaxed” funds is the biggest cause of my high EFC. So a few questions arise:</p>
<p>What is taxable/nontaxable pension income in the first place?
Why is it so high in my family?
Why does it count so much in the EFC calculation?</p>
<p>I understand that these questions are kind of hard to answer without knowing my family’s particular situation, but as I stated before they don’t know English and I don’t know how to translate these terms. I also know that a 6507 EFC is low for most people, but I still don’t think it’s right.</p>
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<p>Yes…isn’t aid given to those that don’t make enough money? I mention that we are dirt poor because for the past few years (wherein I filled out lunch forms, looked at tax forms to fill out job applications, etc.), our AGI was always below $20k.</p>
<p>Does this mean we suddenly became…rich and I didn’t know about it? This implies that the pension income is used as spare money. Is that true? And why do my parents have so much (in comparison to their work income) if they aren’t retired? They are 55 and my dad works in a restaurant. My mom doesn’t work.</p>
<p>I’m sorry if I sound a bit irritable. There’s just so much to fill out on the FAFSA that a 17 year old doesn’t understand…and it’s hard to be patient when the application is already late, it takes so long for it to process one simple change, and I’m going to a school whose only real benefit is its low tuition in the first place. Is there a way to translate the FAFSA so that my parents can fill it out?</p>
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<p>Income from retirement, if that is what pension income means, certainly has a big impact on EFC. I used an EFC calculator, submitting it with and without the nontaxable pension income of $35k and the EFC shot from about 900 to about 6500.</p>
<p>I think you really need to figure out if the money from pensions is correct or not. That’s what’s making your EFC so high and from what you posted, it doesn’t make sense that they received that much money from pensions or IRAs unless they cashed in or withdrew money from a retirement account. Did they do that? </p>
<p>Do you have anyone who can help you talk with your parents? Did they do their own taxes? If there is an error with the retirement money on their taxes, it really needs to be figured out.</p>
<p>Pension income is retirement income from a previous job…perhaps it’s your grandparent which makes no sense since the grandparent should be filling out their own tax form if they are receiving retirement income? Who filled out your parents taxes? Can you go to that person and have them make sure the tax form is correct? For the FAFSA it is a fairly simple process of copying the income from the tax form to the FAFSA. The FAFSA even tells you which line on the particular tax form to copy the amount. You know this I think so maybe make sure the actual tax form is correct. But yes, the difference between your dad’s income from work and the mysterious pension (retirement) income is going to make a difference to you. 16b can also be income from annuities so I would go to whomever filled out the taxes for your parents and ask about that additional income.</p>
<p>I’m sure they had someone help them with it, because the work income is consistent every year (around $20k)… I don’t know if they “withdrew money” from anywhere. I asked my mom for our total cash, savings, etc. and she gave me a piece of paper with $3500 on it (savings account I believe), which is nothing. I’m going to just assume that the pension income is correct. Is pension income spare money? Is that why it is counted so much to the EFC?</p>
<p>Maybe the moderators can combine these two threads…I just realized I posted to an identical in topic thread…</p>
<p>None of my parents have retired. My grandparent hasn’t worked.</p>
<p>Talking to the person that helped my parents fill out the taxes is a hassle because I don’t know how to request it. If they filled it out wrong, why can’t I be consistently wrong? Will they correct answers for me or will they assume that I am lying?</p>
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<p>The majority of the questions on the FAFSA aren’t even on the tax form, W-2 or otherwise. For example, it asks about spare money (cash, savings, etc.). How are we supposed to calculate that? It is also littered with terms that are not known by a high school student. </p>
<p>The main question is whether pension income is spare money and therefore can be used for tuition. If so, I am fine with that. If not (say it is used for retirement purposes), it just doesn’t make sense that I’d have to pay my full tuition at such a cheap school.</p>
<p>I feel your frustration. If the amount for the pensions is correct, there’s not much you can do. I had our EFC shoot up this year because I had to withdraw about $10,000 for my IRA to cover some emergencies that cropped up over the year. It put us just over the Pell grant cutoff and I know, it stinks, since that money is not money that is regularly coming in like wages. </p>
<p>If they are actually getting that much money from a pension, you have to report it on the FAFSA and there’s not much you can do about it. Your parents should have a 1098 form or something like that that tells you how much they actually received from a pension plan. You need to have a discussion with your parents - maybe have someone interpret?</p>
<p>A previous poster said that work income isn’t directly related to the EFC, meaning the lower the income from work, the higher the EFC. Why is this true? Perhaps my view on financial aid is twisted?</p>
<p>No crazybandit from what you are asking it sounds like what is increasing your EFC is this money that is being reported on the taxes as pension, disability, annuity or some other income. And yes, if in fact, your mom and your dad received money from a pension fund, annuity or something like that and it was reported like that on the line on the tax form and you took the amount on the tax form and put it into the FAFSA when it asked for that amount from that line on the taxes, then yes it was most likely money that they received. The adjusted gross income will reflect income earned from work and income that came from other sources. If it’s untaxable it could be disability income or some other income…but those particular lines on the tax form relates to income coming from somewhere else other than a job. Hence my question about who filled the taxes out and if you can ask that person. I know it’s a pain in the butt, and something additional for you to worry about but if you can muster your way through this, it will most likely be of great value to you in the long run. If you stay “consistently wrong” then your EFC will be the higher number because you’ve reported the pension/anuity/disability whatever income. Your EFC will not be based only on salary income it will be based on the salary plus the income from the pension/annuity/diability + the “savings”.</p>
<p>I think you’re adding the wrong amounts…</p>
<p>*Why does it matter where the other 24k come from?
When I said 16K, I meant 19K.</p>
<p>Total “pensions and annuities” is about 50k, and the taxable amount is $15k.</p>
<p>19k+15k = 34k*</p>
<p>Why are you only adding in $15k for the pension amount, when the pension distribution is much larger than that?<br>
**</p>
<p>Wait…is the retirement income from your grandparent? ** If so, you don’t include that. Your GF isn’t responsible for your college costs. And, you don’t include your grandparent in your household since he earn his own living. However, if your GF pays rent or something to the household, that may need to get counted somewhere (don’t know if it does or where that would get put).</p>
<p>^^I asked that question also (was it from the grandparent) but the OP says “no”…but it came from somewhere and someone put it on the tax form on line 16b or one of those lines that the OP mentioned in an earlier post. He can’t ignore it or put in zero because if he’s verified the finaid person will also notice that line 16 entry.</p>
<p>This is bizarre.</p>
<p>Where does this $50k+ come from?</p>
<p>*Why is the nontaxable pension income so high? My parents don’t speak English so I don’t know how to ask them. *</p>
<p>WHAT!!! Don’t you speak your parents’ language? If so, then ask them in their language. You don’t have to ask them in English. Just ask them where that $50k comes from.</p>
<p>*And why do my parents have so much (in comparison to their work income) if they aren’t retired? They are 55 and my dad works in a restaurant.</p>
<p>None of my parents have retired. My grandparent hasn’t worked.</p>
<p>*</p>
<p>Your grandparent may not have worked last year, but does he receive a retirement income or social security? If so, that doesn’t get included.</p>
<p>
That was me. Did you read the whole post? I explained it there. </p>
<p>The income from work reported on FAFSA is not added as income in the EFC formula because income from work is already included as income in the AGI. The income from work number is only used to calculate what your parents’ SS and medicare taxes were so that total income can be reduced by these allowances.</p>
<p>The EFC formula uses takes your income from FAFSA to calculate your EFC. The income it uses is your parent’s (and your) total income. This includes the adjusted gross income (AGI) from your tax return and reportable untaxed income. So in your case the income used in the formula would be the $40,000 from the AGI and the untaxed pension of $35000, making the income $75,000.</p>
<p>The next step of the formula is to reduce the income by certain allowances before calculating your EFC. Some of these allowances are numbers directly reported on FAFSA such as federal income taxes. Other allowances are calculated within the formula based on numbers reported on FAFSA. One of these calculated allowances is for social security and medicare taxes. Social security and medicare axes are taxes incurred only on income earned from work. So FAFSA asks for income earned from work in order to calculate this allowance, that is all it is used for. (remember the income from work is already included in the adjusted gross income (AGI) which is used as "income"in the EFC formula).</p>
<p>Allowances are used to reduce the amount of income available to be used in the EFC formula. The higher the allowances the lower the income available will be. As the allowances for SS and medicare are based on the income from work figure, the higher your income from work is the higher the allowance for SS and medicare will be.</p>
<p>A simple and shorter answer to some of your questions - EFC is not based only on income from work. It is based on total income. So your parents income from work, pension income, and any unearned income all count as income for your EFC. If your parents have $75,000 in total income then that is the income used in the EFC formula. So in your case the income from the retirement income is a huge part of the EFC.</p>
<p>None of us can tell you why your parents have so much retirement income. You would have to ask them. My husband is retired so all his income is retirement income or other unearned income, none is from work. Those are the income numbers we report on our tax returns and on FAFSA.</p>
<p>^^It’s possible the mom and dad are claiming the grandparent as a dependent, but the grandparent could still file their own taxes (if the pension/annuity/disability income belongs to the grandparent.) It could be viewed by the IRS as the same situation as a student…the student is claimed by the parents as a dependent but files their own tax form and on the question “Can you be claimed as a dependent on someone else’s taxes” answers yes.) I’m no tax expert by a long shot, but that is how I would have handled it if I had a grandparent living with me. But if it’s not the grandparent money, then it’s a mystery 
I’ve love to help this OP but I don’t think any of us can until he figures out what that line 16 dollars amount is and who it belongs to. BTW in “our” family we have an older relative who never became a citizen of the US, lives in the US, worked in the US and does receive a pension-type payment from his native European country related to his life before he came here, so the money could be from something originating outside the US relative to the dad, the mom or the grandparent…just a thought.</p>
<p>Where is this pension income coming from? The family should have a 1099 or some other statement for this distribution that explains where it comes from. </p>
<p>I gotta tell you…I’ve been working a LONG time and my retirement income when I retire will be just a tad above $35K per year. I’d love to know where this pension income is coming from? Is it possible there are some kind of mutual funds or something?</p>
<p>^^If the grandparents had that much income I don’t think they could be claimed as dependents. I don’t think a (non child) relative can be claimed as a dependent if their income is more than the personal exemption ($3650). Plus it would not really make financial sense to do so if they have much income as it would make total taxes (between grandparents and parents) much higher. Claiming 2 grandparents as dependents would give you an additional $7300 in dependents allowances on your taxes. But the grandparents filing on their own would get the standard deduction of $11400 and the personal exemption of $7300. So an additional $11,400 income would not attract taxes.</p>