Help with private student loans

BelknapPoint
Mon, 21 Aug 2023 03:08:50 +0000

MMRose:

But if the student earns less than 12,950, per the IRS that isn’t considered taxable and he/she doesn’t have to file a tax return. So isn’t that money also exempt from counting as “income” for FAFSA? Since FAFSA is only looking at the 1040 and is no longer looking at untaxed income? Or do I have this wrong ?

Earned income equal to or less than the standard deduction is still taxable income, it just means that the taxpayer may have no tax liability. But FAFSA (at least the soon-to-be “old” version) doesn’t care, because FAFSA wants to know the student’s Adjusted Gross Income (AGI), which is a figure derived before a standard deduction is applied.

By the way, the standard deduction in 2023 for a single filer is $13,850.