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Is Work Study Included in the Adjusted Gross Income on the FASA?

SVMMomSVMMom Posts: 862Registered User Member
My husband and I are arguing about this and I am about to pull my hair out.

He says work study is not taxable and should not be included and that we also do not have to include it on my daughter's tax return (which she is filling because of a summer job).

I say work study needs to be included on tax returns.

I also think I need to add it on question 43c on the FAFSA. This is the following question:

"Taxable earnings from Work-study, Assistantships or Fellowships

Taxable earnings from need-based employment programs, such as Federal Work-study and need-based employment portions of fellowships and assistantships."

He is hung up on the word "taxable" and says we do not include it because it is not taxable.

Please help settle this arguement!


Thanks.
Post edited by SVMMom on
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Replies to: Is Work Study Included in the Adjusted Gross Income on the FASA?

  • 'rentof2'rentof2 Posts: 4,327Registered User Senior Member
    You do declare it on taxes. For the FAFSA you enter it where asked, and that will remove it from EFC calculations. Meaning, it isn't treated as student income for purposes of calculating the next EFC. It is taxable income though with regard to the IRS.

    Even though it's taxable to the student, most students don't have high enough earnings to have to pay any taxes, so it's not a big deal that it's taxable.
  • emeraldkity4emeraldkity4 Posts: 32,488Registered User Senior Member
    Worksheet C asks for income and benefits that are to be excluded from taxable income. Most students will report money earned from work-study here. Remember that the FAFSA is based on the calendar year, not the academic year. Another common exclusion is child support paid by the student or any other person whose income is reported on the FAFSA. If any grant or scholarship aid was reported on the income tax form, it should also be reported here.

    FinAid | Financial Aid Applications | Common Errors
  • swimcatsmomswimcatsmom Posts: 14,942Registered User Senior Member
    Work study is taxable income. It is taxable for federal taxes (and possibly state taxes, depending on the State). It does not attract FICA taxes.

    When you report the student AGI on FAFSA it will include the WS income. There is another question on FAFSA that asks about taxable scholarships, grants, and WS that are included in the AGI. These question (43c and 43d) are used in the EFC formula to deduct those items from the student AGI before calculating the EFC.
  • 'rentof2'rentof2 Posts: 4,327Registered User Senior Member
    Just re-read your post.... you definitely want to include it on the FAFSA were asked because that is how the FAFSA knows to deduct from his gross income for purposes of EFC calculation.
  • swimcatsmomswimcatsmom Posts: 14,942Registered User Senior Member
    The worksheets referenced in post #3 do not exist anymore. Finaid is unfortunately quite out of date. A shame, as it was the very best source of information for FAFSA and financial aid when I was first figuring out FA. Other than CC, of course.

    The other mistake people make is not answering the "income from work" question because they think they are double reporting income that is included in the AGI. But the income from work question is used to calculate the allowance for FICA taxes (@7.65% of income from work), which reduces income, so reduces the EFC.
  • SVMMomSVMMom Posts: 862Registered User Member
    Wow! You guys are fast. I knew I was right! :)

    Now a second issue. When I put in her total income (6,177) it gives me this error message:

    The following error(s) have occurred:

    You reported a total amount from the student's additional financial information fields that is high for the other income amounts reported.


    What?

    What does this mean and what do I do?
  • swimcatsmomswimcatsmom Posts: 14,942Registered User Senior Member
    I think I run into this problem every year. Some things to check:

    The income from work plus income from WS plus income from taxable scholarships cannot be greater than total AGI.

    The income from work number should not include WS (I think, as WS does not attract FICA and the income from work question is used to calculate FICA allowances).
  • SVMMomSVMMom Posts: 862Registered User Member
    ok, so GI s/b be ws plus summer job = $6,177.

    but her income earned from wor s/b only her summer job # which is $2,829?
  • swimcatsmomswimcatsmom Posts: 14,942Registered User Senior Member
    I think that is what worked for me when I fiddled around with it last year.

    Her income should have no impact on the EFC as it is below the protected student income allowance.
  • kelsmomkelsmom Posts: 12,479Super Moderator Senior Member
    Income from work includes all income from work ... this would be any income that would be reported on line 7 of a 1040 or 1040A (or line 1 of a 1040EZ). This would include the work study income.

    When asked later about income earned from work study, the portion of income from work that was earned through work study is reported.

    So ... in your scenario, income from work is $6177. Income from work study is $6177-2829=3348. If you entered $2829 for income from work but $3348 for work study earnings, you WOULD get an error message!
  • kelsmomkelsmom Posts: 12,479Super Moderator Senior Member
    In the other financial info fields, did you report anything for the student other than work study earnings?
  • swimcatsmomswimcatsmom Posts: 14,942Registered User Senior Member
    So what causes the problems with the "You reported a total amount from the student's additional financial information fields that is high for the other income amounts reported." error message? I have run into this the last couple of years and it won't let me proceed until I tweak the numbers.
  • kelsmomkelsmom Posts: 12,479Super Moderator Senior Member
    If reported income from work is less than the amount of work study reported, then that raises a flag ... because work study IS income from work. It doesn't make sense to report work study earnings less than income from work.

    Another issue would be the scholarships, I think, swimcatsmom. They are reported on line 7/line 1 if 1040EZ, but they are not technically "income from work." So when you report income from work, you are reporting the income only ... and then when you report the taxable portion of scholarships in the section that subtracts it out, the amounts don't jibe. Let's say your D earned $5000 income & had $6000 in taxable portions of scholarships/grants. You report income from work as $5000, but you put $6000 in the section that asks about taxable portions of scholarships/grants. I THINK this might cause a flag. When you tweak, are you tweaking the income from work to include the taxable portion of scholarships/grants? I am not familiar with the FAFSA logic for this, so I don't know ... but tomorrow when I get to work I will try to take a few minutes & try that theory out on the FAFSA demo!!
  • swimcatsmomswimcatsmom Posts: 14,942Registered User Senior Member
    I am trying to remember from last year. I am pretty sure I excluded the scholarship money from income from work as I knew that should not be included, but still got an error message. I thought I ended up taking out the WS income to make it finally go through, but it is a while ago so I may be remembering wrong. Mainly I just remember being very irritated because I could not figure out what the heck was wrong!

    I thought perhaps the WS income was omitted because the income from work number is used to calculate FICA, and WS does not incur FICA.

    It would have made no difference to our EFC as her non FA income was below the protected income allowance. But it would be nice to know.
  • kelsmomkelsmom Posts: 12,479Super Moderator Senior Member
    It might be that the computer program "knows" to exclude the w/study from income from work because you told it how much w/study you have. The scholarships/grants one is different, though, so I am curious now as to whether or not the FAFSA programming expects it to be part of income from work & then backs it out?? We shall see ...
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