<p>For some reason I though that work study was not taxed. D received a W2 from her school for about $1800 which was the amount she earned for work study. They did not deduct any federal, ss or FICA throughout the year. Combined with with her summer job income and scholarships she will be over the 6k limit to avoid taxes. Am I doing this wrong?</p>
<p>Nevermind. Google was my friend. Work study is taxable. I’m not sure where or why I thought it wasn’t!</p>
<p>You are right, work-study is taxable, but no SS or medicare is paid on the earnings. There is a dependent student income allowance of $6260 for FAFSA and a question to enter need-based employment earnings so it is not counted against the student for EFC. There’s also a question for taxable scholarships reported to the IRS so that is not held against the student.</p>
<p>Yes, workstudy is taxable income that is included with other wages. IF the amount a student earns exceeds tax threshhold due to WS proceeds, he does have to file taxes and it is included just like any other earnings as far as the IRS and state tax rates go. However, no SS or medicare is owed on those earnngs and on FAFSA and other fin aid apps, WS wages are not counted towards EFC. So they have to be subtracted out. As Annoyingdad says, the same goes for scholarships that may have to be reported to the IRS< and taxes might be owed on theme, but they are subtracted out for FAFSA purposes.</p>
<p>The other thing to watch are the assets. IF your son has assets sitting in an account, if he can attribute them all to workstudy proceeds or other fin/merit aid, they are excluded, which can be a significant deal since FAFSA hits up students for 20% of their assets as of the day they complete the FAFSA. </p>