My mother currently makes $28k. In 2017 she did a rollover with her 401k where she moved 401k funds to her IRA. As a result, her line 16A on her 1040 is around $48,000. On the FAFSA, it asks to subtract lines 16A from 16B. This amounts to 48,000 as her line 16B is 0. As a result, my EFC is around 14,000, even though it was 0 the first year I was in college. Did I fill this out correctly? This money is in her IRA, not her bank account. Is there anything I can do because this EFC doesn’t actually reflect her income.
You enter the amount on line 16b (in your case $0) That’s the amount of taxable income.
Since she did a rollover, there is a box to check on the FAFSA that it is a rollover and not income subject to tax on this return.
Right. Do what the FAFSA tells you to do regarding that rollover. Otherwise, it will be included as income…and a rollover is not income.
The biggest thing folks miss is the little box!