How do I decrease my EFC?

cptofthehouse
Sun, 23 Dec 2012 20:06:28 +0000

Bella, when your report your income for 2012, for example, that income includes the amount you subtracted out for tax purposed as an IRA contribution. Though the IRS exempts that amount for tax purposes, FAFSA does not. Once the contribution is in an IRA or 401K or other such account, it is not counted as assets when you have to list assets on FAFSA. You do have to report such accounts on most if not all PROFILE forms, but they are usually not taken into account. So, yes, IRA contributions for previous years become non reportable assets. You just cannot reduce a year’s reported FAFSA income by contributions to your pension or other such plan. They reduce your taxable income; not your FAFSA income.