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FAFSA question (86/87) - Income Earned from Work

dukedaddukedad Registered User Posts: 269 Junior Member
For this question on the FAFSA I've assumed that the lines for "father/mother income earned from work" just include W-2/Business/Farm wages (lines 7/12/18 on 1040). I learned recently that this question is not used on the FAFSA for calculating parent available income, but instead is used to calculate the parent's social security taxes, which are then used as an allowance against income in the EFC formula. Thus ALL earned income subject to FICA taxes should be included here.

In "Paying for College Without Going Broke", it instructs that "for tax filers only - contributions to tax-deferred pension and savings plans such as 401k plans" should be included, or added back in on lines 86/87. Is this true? But medical/dental/vision and FSA deductions are not added back in?

Replies to: FAFSA question (86/87) - Income Earned from Work

  • MomCat2MomCat2 Registered User Posts: 961 Member
    dukedad, contributions to 401K or 403b plans ARE subject to FICA, but I'm pretty sure that insurance premiums and FSA deductions AREN'T.

    Looking at the IFAP FAFSA instructions, the calculations (they use just lines 7/12/18, IIRC) yield an INCORRECT amount for FICA for those who made pre-tax retirement contributions -- so Chany (author of "Paying for College...) is right: in order to get the FICA amount to come out right, contributions to tax-deferred retirement plans should be added back in. Chany says in the book that he has been trying to get the Dept. of Ed. to correct this error, apparently for a fairly long time.
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