We get phone calls and e-mails when folks hit question 85. Well, let me take that back. Most folks can answer question 85, it is everything AFTER that where things get a bit murky (and the despair sets in). For good reason, these questions read like the tax code:
Questions 88 and 89 ask about earnings... this information may be on the w-2 forms, or on IRS form 1040- lines 7+12+18+Box 14 (Code A) of IRS schedule K-1 (Form 1065); on 1040A-line7; or 1040EZ-line 1
I took that verbatim from a FAFSA application I printed off the internet. We are not saying a normal person can't fill this out, we are just saying the government didn't make this thing very "intuitive". When it comes to filling out a federal application that will affect your child's future, we just want to be sure. No one wants to be accused of submitting fraudulent information.
That being said, here are a few things we'd like to offer to help you get through this process as fast as humanly possible.
1. Deadlines, deadlines, deadlines
First things first, this thing is due June 30 at the end of each academic year. For example, the deadline to submit your FAFSA application for the 2014-15 school year would be June 30th, 2015.
But, funds are on a first-come, first-serve basis so you want to request assistance as soon as you can after the first of the year. **You can submit your FAFSA using estimated tax information, but you must correct it right after you file your return.
**Make sure to click on the "State Aid Deadlines" link at FAFSA website for information on the deadlines in your state.
2. IRS Data Retrieval Tool
Do not reinvent the wheel, especially if you don't have to. Use this (if you don't fall into one of the five exceptions below). This is the easiest way to complete or correct your FAFSA with accurate tax information. You can view and transfer your tax info directly into the FAFSA!
Here are some cases where you will not be able to use this feature:
- Students or parents who are married and file as Married Filing Separately
- Students or parents who are married and file as Head of Household
- Students or parents filed an amended tax return
- Students or parents filed a foreign tax return
- Students or parents filed their tax returns electronically within the last 3 weeks or through the mail withing the last 11 weeks.
3. Who is My "Parent"/ Marital Status of Parents
Don't chuckle, this one trips a lot of folks up. Read the remainder of Item 3 as if you were the applying student.
Don't chuckle, this one trips a lot of folks up. Read the remainder of Item 3 as if you were the applying student.
Parent, according to FAFSA, is your legal (biological and/or adoptive) parent or stepparent.
- If your parents are divorced or separated and DON'T live together, answer the questions about the parent with whom YOU LIVED MOST during the past 12 months.
- If you lived the same amount of time with each parent, give answers about the parent who provided MORE FINANCIAL SUPPORT during the past 12 months. (In a situation where the parents split all costs it will generally default to the parent with the greater income).
- If you have a stepparent who is married to the legal parent whose information you're reporting, you must provide that stepparent's information. (If your father and step-mother are the ones on the return, they are your "parents" for this application)
- FAFSA asks about "Your Parents'" information. Again, since you are using ONE tax return, you will use the people on the tax return as your "Parents".
- The only exception to the above is when FAFSA asks about your parents' education level. For this question your parents are considered your birth parents or adoptive parents.
4. What you need
They say that as long as you have your tax return you can answer these questions... sort of, but not really.
You should also have at the ready:
5. Tips when answering questions 85-94 on FAFSA
They say that as long as you have your tax return you can answer these questions... sort of, but not really.
You should also have at the ready:
- All Forms W-2 used on the tax return.
- Current cash on hand, and balances in all savings and checking accounts.
- Your total investments, including real estate... but don't include the home you live in.
- The net worth of your business(es).
- A total of all child support paid AND/OR received because of legal requirement.
5. Tips when answering questions 85-94 on FAFSA
- #85 is your AGI. Line 37 on Form 1040.
- #86 Enter your parents' income tax. Line 55 on Form 1040
- #87 Enter your parents' exemptions. Line 6d on Form 1040
- #88 How much did Parent 1 & Parent 2 earn. This is where they throw you for a loop. They want to know how much EACH parent earned.
- Not each biological parent.
- Not just the one parent who shares DNA with the applying student.
- They want the amount earned by the 2 individuals on the tax return you are using. There is no "line" for this separated wage information on a joint tax return. The best thing to do here is to use the wage information from the parent's/parents' W-2.
- #90 Add up the current balance of cash, savings and checking accounts.
- #91 Net worth of your parents' investments, including real estate... but not the house you live in. (NET WORTH= CURRENT VALUE less DEBT. If you net worth is negative, enter 0.)
- Investments include- (*Investment value = current balance or market value of these investments as of today. Investment debt means only those debts that are related to the investments.)
- Real estate - raw land
- Rental property
- Trust funds
- UGMA & UTMA accounts
- Money Market, Mutual Funds, Certificates of Deposit, Stock, Stock Options, Bonds, Other Securities
- Installment and land sale contracts (including mortgages held)
- Commodities
- Qualified educations benefits or education savings accounts
- For a student who must report parental information, the accounts are reported as parental investments in #91, INCLUDING all accounts owned by the student and all accounts owned by the parents for any member of the household
- Investments DON'T INCLUDE:
- The house you live in
- The value of life insurance
- The value or retirement plans (401K, pensions, annuities, non-education IRA, Keogh)
- Cash, savings and checking accounts.
- UGMA & UTMA accounts for which you are the custodian, but not the owner.
- #92 Net worth of your parents' current business/investment farms. DON'T INCLUDE a family farm or family business with 100 or fewer full-time employees (So, this applies to virtually no one.)
- #93 Parents' additional financial information... some of which is on the tax return.
- a. Education credits-- Line 49, Form 1040
- b. Child Support paid
- c. Parents' need-based employment portions of fellowships
- d. Parents' taxable student grant & scholarship aid
- e. Combat or Special Combat pay
- f. Earnings from work under a cooperative education program offered by a college
- #94 Parents' Nontaxable Items (everything else...)
- a. Payments to tax-deferred pension and retirement savings plans (on W-2)
- b. IRA deductions & payments to self-employed SEP, SIMPLE, Keogh & other IRS qualified plans. Line 28+Line 32, Form 1040
- c. Child Support Received (don't include foster or adoption payments)
- d. Tax Exempt Interest. Line 8b, Form 1040
- e. Nontaxable portion of IRA distributions. Line 15a- Line 15b, Form 1040
- f. Nontaxable portions of pensions. Line 16a- Line 16b, Form 1040
- g. Housing, food, and other living allowances paid to members of military, clergy, others
- h. Veterans' non-education benefits, such as Disability, Death Pension, and/or VA Education Work-Study allowances
- i. Other nontaxable income not reported like Worker's Comp, Disability, HSA deductions
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