The main thing you need to make sure you do is file your taxes on time and report all wages, unearned income, etc. Everything else is optional (including FA apps like fafsa and profile - though highly unlikely you wouldn’t), but if you fill out the FA forms make sure you do so correctly using your tax forms (and parents’ tax forms), and include all of your assets (and theirs too).
As for my comments about form W-4 and under-withholding, just google it to see if you need to worry about it. Not likely it’s a factor but something to be aware of. When you finish your taxes this year, you’ll see the full picture and can adjust your W-4 for this year to be a more accurate amount. Whatever your final tax is, you want to have your monthly withholding approximate that. It shouldn’t just be just based on your earned income from wages.
Just a note that even claiming 0 exemptions from withholding is likely not enough if you also have taxable scholarship income. I needed to withhold about 2000 extra ON TOP of 0 exemptions on all the W4s at my jobs, so withholding the default max + EXTRA.
That was on 18k of extra scholarship income though, so there’s that. But just a note.
I got all my aid from fafsa (pell grant + cal grant) so on the FAFSA i report 0 financial aid since it says to not include federal aid
but on CSS it didn’t specify and it isn’t directly from the governmet, so i included everything i earned from fafsa (came to around 8000). also important to say that in bank accounts i said i had 0 since it said not to include financial aid.
so what will colleges do with that 8000 number, will they count that as some sort of income? because my college’s (community) total estimated price is about 11000 so i think they should take that into consideration too before they count that 8000 as if it were just extra money
any help? im just worried that theyll add those 8000 directly to our total income when it goes to paying for school at the moment.
also im transferring next year so that is why i ask this now.
also for tax purposes… do we report money we get from federal grants like pell and cal grant? cuz isn’t that already coming straight from the government? so it’d be like double reporting since they already know they gave you that money ? would this then be considered untaxed income, is that how they treat the 8000 number?
also: parent income in 2015 taxes is substantially lower than 2017 predicted income (which was asked for in CSS). there’s like a $15k increase. when they consider aid, will they go with the 2015 taxes amount (for 2017-18 school year) or will they go based off of predicted 2017 income?
@otoribashi you do realize that government employees get taxed on their income and the comes “straight from the government” and so do people getting social security income.
I should clarify since it’s confusing people, the taxable amount on that 18k or so was about 28% but I had overwithheld at all my jobs, so the net owed amount was “only” 2k. I think it was nearly 5k in taxes on that 18k, but what I had withheld was obviously credited towards that.
re @otoribashi 's question - you only pay taxes on the grants you get if they are over the amount the school charges for tuition, fees etc. (so unless your school’s tuition is <$8000, you don’t need to worry). To use Courtney as an example, she probably had tuition around $50,000, but the entire COA was covered by grants (tuition plus room and board) was probably around $65,000. Then she worked for an additional amount (maybe $3,000) to make that taxable scholarships and income be $18,000 (68000-50000). She didn’t have to include that full 65,000 in grants anywhere, only the taxable amount of $18,000.
Then on fafsa and profile, I think there’s a place for you to enter the taxable scholarships and work-study so that they are effectively removed from your income for the sake of FA calcs.
I hope i’m getting all this right, people can correct me if i’m wrong.
When you do the W4 calculator you can add your excess scholarships to the expected work income and see how much you need to have withheld from your employer.
You can have more withheld than necessary to cover the scholarship income. If not you might have to make estimated payments and it’s easier to just have it withheld from your pay.
“Courtney as an example, she probably had tuition around $50,000, but the entire COA was covered by grants (tuition plus room and board) was probably around $65,000. Then she worked for an additional amount (maybe $3,000) to make that taxable scholarships and income be $18,000 (68000-50000).”
Tuition was 34. COA was 52k. So 18k in non-QEE. Working had nothing to do with that figure, although all my jobs and internships did bump me into a higher tax bracket.
TurboTax asked for the tuition amount (34k), and the amount of total scholarships (52k in my case, full COA). They subtracted the QEE from non-QEE and that’s what was taxable (on top of all the earned income from jobs, etc).
I am independent for taxes so my parent’s tax rate did not come into play, but maybe something to consider for others.