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

MomCat2
Tue, 12 Apr 2011 21:28:26 +0000

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.