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FAFSA newbie questions

Pretzelmom62Pretzelmom62 1 replies1 threads New Member
This is the first time we are filling out the FAFSA. I have a couple of (probably) easy questions.
1. Where on the FAFSA do we enter the value of a 529 college savings account?
2. One article I read on this site said debt was important but there are no questions asking about it. For example, our mortgage. Is that included in our tax return? We have used an accountant for so long , I don't remember. And we did successfully link to IRS, so is that all we need to do regarding mortgage debt?
3. Do Roth IRA contributions need to be included? I couldn't find a mention of them.
4. When I go back to try and edit some of my answers, some of the questions are no longer accessible, and some don't appear. What am I missing??
Thank you!
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Replies to: FAFSA newbie questions

  • BelknapPointBelknapPoint 4548 replies16 threads Senior Member
    1. Where on the FAFSA do we enter the value of a 529 college savings account?

    FAFSA question 89, which asks about parent investments, but only if the 529 account is owned by the student or a custodial parent.

    2. One article I read on this site said debt was important but there are no questions asking about it. For example, our mortgage. Is that included in our tax return? We have used an accountant for so long , I don't remember. And we did successfully link to IRS, so is that all we need to do regarding mortgage debt?

    FAFSA does not ask for any information on debt.

    3. Do Roth IRA contributions need to be included? I couldn't find a mention of them.

    Because Roth IRA contributions do not receive favorable tax treatment, they are not reported on FAFSA.

    4. When I go back to try and edit some of my answers, some of the questions are no longer accessible, and some don't appear. What am I missing??

    The online version of FAFSA uses skip logic, so that may be why certain questions no longer appear or are no longer accessible.

    Some of your questions could have been easily answered by reading the FAFSA instructions. I recommend that you do that before the FAFSA is completed and submitted.
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  • Pretzelmom62Pretzelmom62 1 replies1 threads New Member
    thanks, I appreciate your answers!
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  • cptofthehousecptofthehouse 29583 replies58 threads Senior Member
    The only debt that can affect your FAFSA entries are secured debt on your assets. For example, margin loans reduce the.value of your brokerage account assets reduce the value of any investment properties or SECOND homes. Because your primary home value is not reported on FAFSA, that mortgage is ignored.

    Qualified plan assets like IRAs, 401ks and that incudes Roth’s are NOT reported on FAFSA. However, deducted contribution to such plans have to be added to income for that tax year that FAFSA is using. For this Current FAFSA , 2018 is key. You don’t deduct Roth contributions, so they are not reported.

    It is likely if you link your filed taxes in the process, FAFSA will bring over info automatically. The IRS Data Retrieval Tool (IRS DRT) Electronically Transfers Your Federal Tax Return Information Into Your FAFSA Form. In the finances section of the online form, you will see a “Link to IRS” button, if you are eligible to use the IRS DRT.
    you just click the “Link to IRS” button and log in with your FSA ID to be transferred to the IRS to retrieve your info.

    Although income info is based on 2018 for the 2020-21 School year, assets are reported as of the date you file the FAFSA. Any earmarked money for a project, like insurance proceeds to replace damages sitting in your accounts should be spent before you file FAFSa because that asset value you report is a snapshot of your assets including whatever is in your checking account. Pay day is not a good day to file FAFSA.

    Also, if your student has money, savings, assets, it’s a good idea for him to pay for his high school, activities expenses, reimburse you for things you paid for him because student assets get zero protection allowance and are hit at 20% vs the ~5.6% parents get assessed. Any large monetary gifts your student may get should go to you rather than him because if Grandma directly pays for his tuition or dental/medical bill,music lessons,that is supposed to be reported on the student part of FAFSA whereas gifts to parents are not reported.

    @BelknapPoint is absolutely correct in advising you to read through the instructions carefully. It’s a pain to correct some mistakes and you cannot change the date you report those assets if you inadvertently pick a bad day when you have money that is earmarked sitting in accounts.

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  • thumper1thumper1 75184 replies3300 threads Senior Member
    What answers are you trying to edit that no longer appear?

    Is your annual income less than $50,000 a year?
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  • BelknapPointBelknapPoint 4548 replies16 threads Senior Member
    Any large monetary gifts your student may get should go to you rather than him because if Grandma directly pays for his tuition or dental/medical bill,music lessons,that is supposed to be reported on the student part of FAFSA whereas gifts to parents are not reported.

    I generally think it's a bad idea to recommend that a gift intended for the student be masked for financial aid purposes by routing it through a parent. If the intention is that the gift be used for or by the student, simply giving it to a parent first doesn't change the fact that it's for the student, and it should still be reported on FAFSA as a gift to/for the student. Laundering the gift through a parent doesn't change the basic facts. If the parent gets the money first and uses it for something it wasn't intended for (lottery tickets, gambling, booze, etc.), well, that's a whole different problem.
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