FAFSA / Tax Form Questions

[VinnyM]

When MUST You Use Form 1040?
You must use Form 1040 if any of the following apply.

1. You received any of the following types of income:
   1.a. Income from self-employment (business or farm income).
   1.b. Certain tips you didn’t report to your employer. See the instructions for Form 1040A, line 7.
   1.c. Income received as a partner in a partnership, shareholder in an S corporation, or a beneficiary of an estate or trust.
   1.d. Dividends on insurance policies if they exceed the total of all net premiums you paid for the contract.
2. You can exclude any of the following types of income:
   2.a. Foreign earned income you received as a U.S. citizen or resident alien.
   2.b. Certain income received from sources in Puerto Rico if you were a bona fide resident of Puerto Rico.
   2.c. Certain income received from sources in American Samoa if you were a bona fide resident of American Samoa for all of 2017.
3. You have an alternative minimum tax adjustment on stock you acquired from the exercise of an incentive stock option (see Pub. 525).
4. You received a distribution from a foreign trust.
5. You owe the excise tax on insider stock compensation from an expatriated corporation.
6. You owe household employment taxes. See Schedule H (Form 1040) and its instructions to find out if you owe these taxes.
7. You are claiming the adoption credit or received employer-provided adoption benefits. See Form 8839 for details.
8. You are an employee and your employer didn’t withhold social security and Medicare tax and they were required to do so. See Form 8919 for details.
9. You had a qualified health savings account funding distribution from your IRA.
10. You are a debtor in a bankruptcy case filed after October 16, 2005.
11. You must repay the first-time homebuyer credit. See Form 5405 for details.
12. You had foreign financial assets in 2017, and you must file Form 8938. See Form 8938 and its instructions.
13. You owe Additional Medicare Tax or had Additional Medicare Tax withheld and must file Form 8959. See Form 8959 and its instructions.
14. You owe Net Investment Income Tax and must file Form 8960. See Form 8960 and its instructions.
15. You have adjusted gross income of more than $156,900 and must reduce the dollar amount of your exemptions.
16. You received a Form W-2 that incorrectly includes in box 1 amounts that are payments under a Medicaid waiver program, and you can’t get a corrected W-2, or you received a Form 1099-MISC that incorrectly reported these payments to the IRS.
17. You are eligible for the health coverage tax credit. See Form 8885 for details.
18. You received Olympic or Paralympic medals or United States Olympic Committee prize money on account of your participation in the Olympic or Paralympic Games.
19. You had a net qualified disaster loss and you elect to increase your standard deduction by the amount of your net qualified disaster loss. See the instructions for Form 4684 and Schedule A, line 28…

[VinnyM]

Quotting Message 43 from mommdc on 12-30-2018 at 9:46 am

You can go to Collegeboard EFC calculator and run the EFC (federal methodology) both ways, and see for yourself.

@mommdc,

Why did you recommend the Collegeboard EFC Calculator over your own FAFSA Spreadsheet for Estimating Dependent Students’ EFC and Pell Grant Awards?

I am almost positive that yours is also Federal Methodology.

[VinnyM]

Quoting Message #58 from thumper1 on January 1, 2019 at 12:13 pm

Is there a limit on the dividend income amount to file a 1040a?

@thumper1,

No, Form 1040A does not have any limits on interest or dividend income.

Would you still like my parent’s dividend income?

VM

[VinnyM]

Quoting Message #53 from thumper1 on 12-30-2018 at 4:15 pm

Are you saying your parents paid for medical expenses beyond what was covered by insurance in the amount of $34, 000 in 2017? And they used savings, credit cards, and stock liquidation?

@thumper1,

Not exactly…

I should have said…

In 2017, my family had $34,880 in medical expenses (pursuant to IRS regulations) not covered by insurance that my parents paid using cash (5%) and long-term savings and credit card debt (95%).

Sorry for not being more clear.

VM

[mommdc]

The FAFSA EFC spreadsheet is not mine. The Collegeboard EFC calculator is quick and easy to use online. No downloading.
Since I cannot link to Google docs on here, you would have to request the spreadsheet from @joecolleta via PM.

[VinnyM]

Quoting Message 32 from twoinanddone on 12-29-2018 at 11:06 pm

I filed taxes for my kids even if nothing was owed as it was easier to file the FAFSA if there was a returned filed.

@twoinanddone,

Thank you for the advice!

Obtaining letters from IRS certifying non-filer status was a pain.

Thanks, again!

VM

[mommdc]

The FAFSA EFC spreadsheet is not mine. The Collegeboard EFC calculator is quick and easy to use online. No downloading.
Since I cannot link to Google docs on here, you would have to request the spreadsheet from @joecolleta via PM.

It could prove helpful to your dad.

[VinnyM]

@mommdc,

Sorry, I misspoke when I said, “yours.” I should have said, “the Forum’s.”

My father has found the spreadsheet helpful, which is why I was confused by your referral to CB’s calculator.

VM

[VinnyM]

@mommdc,

I am going to “independently” confirm my father’s (i) 1040 and (ii) 1040X/1040A calculations using both the CollegeBoard EFC Calculator and the forum’s EFC Calculator and Pell Grant Estimator before advancing any of this thread’s messages.

Thanks for the encouragement!

VM

[twoinanddone]

So my understanding is that after filing the 1040A-x, and actually paying some tax because you will no longer have a $30k medical deduction, you feel you (and your sister) will receive a larger Pell grant? Are you sure your income will be under $50k so that you will qualify for simplified assets? If your parents will owe $1600 in taxes, I have to guess that the income was very close to $50k to still have some income to pay taxes after the standard deduction ($12k) and 4 personal exemptions ($4k x 4).

I’m just not seeing a scenario where you are going to go from $50k in above the line income/deductions to a situation where $30k, plus other exemptions and deductions takes you to a $0 tax owed, and that you still qualified for an EFC of $2500. A big medical deduction is below the line and will NOT change your parents’ income. Your income shouldn’t look all that different using a 1040 or a 1040A.

I’m really not understanding how switching to a 1040A will help. You might have as much success appealing to the colleges for professional judgment for one time extreme medical expenses paid for with 2017 income. That might get you more in Pell grants for 2018-19 school year AND 19-20.

Using simplified assets doesn’t get you an EFC of $0. Even if you ‘only’ have income of $50k, you still might have an EFC of $2500.

[mommdc]

Paying $1,600 in taxes to get $300 change in EFC doesn’t seem worth it.

[twoinanddone]

^^Well, I think Vinny is thinking he’ll get $3000 more and so will his sister if they get full Pell grants. I just don’t think they’ll see that much of an increase.

[VinnyM]

VERY IMPORTANT

@mommdc @thumper1 @twoinanddone @rosered55 @BelknapPoint @Madison85 @allyphoe @CaMom13 and anyone else following or reading this thread…

Based on your experience, assuming you enter the same information in the CollegeBoard EFC Calculator and the forum’s EFC Calculator and Pell Grant Estimator, obviously, did you get identical EFCs, very close EFCs, or different EFCs?

Thank you very much for your feedback!

VM

[VinnyM]

I figured out why the forum’s spreadsheet did not match the CollegeBoard’s…

The first scenario I ran was “I did not qualify for Simplified EFC Formulas” (because my parents filed Form 1040) causing 20% of my assets to be included in Student’s Contribution From Assets and therefore in my EFC.

For anyone who is unfamiliar with the forum’s EFC Calculator and Pell Grant Estimator, the EFC Calculator includes or does include the Parents Contribution From Assets and the Student’s Contribution From Assets appears to be based on the answer to the question “Does the student qualify for simplified EFC formula?” and the amount enter on Line 1: Parents’ AGI or Line 3: Parents’ Taxable Income.

When I entered the data in the CollegeBoard’s EFC Calculator, I noticed that there EFC calculator did not ask “On which form did your parents filed their 2017 taxes?” nor did it ask “Does the student qualify for simplified EFC formula?” Or the needs-based testing questions. Therefore, the only data the CollegeBoard’s EFC calculator had to decide whether or not you qualified for simplified EFC formula was your parents’ AGI.

In my case, my parents AGI was under $50,000, so the college boards EFC calculator assumed that I qualified for simplified EFC formulas and therefore did not include my parents contribution from assets or my contribution from assets when calculating my EFC.

My proof that my theory is correct is based on the fact that my parents contribution to the EFC equals the college boards EFC meaning the college board did not take into account the contributions for my assets which it should have because I didn’t qualify for the simple by EFC formulas.

The bottom line is I am now convinced your calculator and the college boards calculator result in the same EFC except for the error in assumptions related to qualifying for simple EFC formulas.

I can’t believe Mr. Coletta was able to outperform the college board!

VM

It’s

[VinnyM]

Here are the results for my EFC only…

I qualify for simplified EFC formulas: EFC = 1892*
I do not qualify for simplified EFC formulas: EFC = 3763**

• This same result was generated by the CollegeBoard's EFC calculator and the forum's EFC spreadsheet. ** This result could only be generated by the forum's EFC spreadsheet and could not be reproduced by the CollegeBoard's EFC calculator because I could not figure out a way to trick the CollegeBoard's EFC calculator to believe that I did not qualify for simplified EFC formulas.

The following Pell grant estimates below were produced by the forum’s EFC calculator and Pell Grant estimator based on last year’s Pell grant tables. According to the forums calculator estimator the new Pell grant tables are not yet available.

I qualify for simplified EFC formulas: Max. Pell Grant = $4,070
I do not qualify for simplified EFC formulas: Max. Pell Grant = $2,170

Given the fact that these numbers are only for me and not my sister, I think it’s extremely obvious that my father is right and should file an amended return provided the 12 week delay does not erase all the gain suggested above.

Does anyone have any thoughts on this?

Thank you very much

VM

[twoinanddone]

The Pell grant will be the same if you file in Oct or in Feb or even in Sept. It is the OTHER money that runs out, the SEOG, the school’s need based aid, and some schools have priority deadlines for school aid. Doesn’t mean you won’t get it, but you might not get as much.

Have you tried appealing your FA awards based on the very large medical bills paid last year? You would be appealing for this year, but if awarded, it might carry over to next year.

[VinnyM]

@twoinanddone

Yes, I have, and yes, I will.

Thanks for all of your assistance twoinanddone!

VM

[mommdc]

Yes, the EFC I got from Collegeboard, spreadsheet and EFC formula was the same in our case.

Collegeboard EFC calculator doesn’t ask about siimplified needs or tax form used, but it asks about means tested benefits and dislocated worker, two other qualifiers for simplified needs test.

Starting in 2018 tax year, there won’t be a 1040A or EZ anymore, we don’t know what that will mean in regards to simplified needs test going forward.

If you are going to amend parents’ 2017 tax return, take the 1098T and tuition statement for 2017 with you too and see if your parents could have claimed AOTC for you and your sister, and if you and your sister will end up having to file a 2017 tax return as a result.

[VinnyM]

Does anyone know how I can get a copy of the updated FAFSA spreadsheet?
Thank you very much.
VinnyM