Important: How to report/invest 60k

Paying for College
1

<p>So I have recently received a surrogate’s check for 60K in my name. How can I avoid this from affecting my EFC? My current EFC is 0. How should I report that on my FAFSA next year? Would it be wise to put that $$ under my mother’s name (have a joint account with her as the head of the account <em>idk the correct term for that</em>) OR put it in the moneymaket/CD? Should she report this amount of $$ or should I? Thanks in advance for all your help guys! :-)</p>

<p>EDIT: Will this affect federal aid? Will it not be offered to me anymore?</p>

2

<p>I’m not sure what a surrogate’s check is.</p>

<p>Off hand it sounds like something that would have to be reported as income on FAFSA and also as an asset. Even if you put it in an account that you share with your Mom, you are legally required to report any assets that belong to you as your assets, not your Mom’s. Not doing so would be fraud.</p>

3

<p>You invest them in your name and you report the money in the way that let’s you avoid spending time in federal prison, i.e. honestly.</p>

<p>Need-based financial aid is for those who literally don’t have any money. You are not one of those people and you will be caught if you will try to do anything funny with the money.</p>

4

<p>Please explain what a surrogate check is. If it is possible for this money to be disbursed directly to your mom, it would be tapped at a lower %age than in your name as an asset. See if this can be done. It is not fraud to do this IF the money can be directed to your moms account. </p>

<p>Because I have no idea what a surrogate check is, it is hard to say how this would be reflected as income or not.</p>

5

<p>I think this is a check for being a surrogate mother. The OP had a baby for someone else.</p>

6

<p>An 18-22 year old was a surrogate parent?</p>

<p>OP when did you receive this check? If it was in 2012, it would be reported on NEXT year’s FAFSA…the one for the 2013-2014 school year. If it is considered income, it would go on that FAFSA, if any of it is still in your possession, regardless of where, it will be reported as an asset.</p>

<p>However, if you qualify for the simplified needs test, I don’t believe the asset is reported… But maybe that is parent assets…someone will need to clarify this. I’m not clear on the simplified needs test and it’s provisions.</p>

7

<p>When I was younger, I was in an accident and won a settlement. The money has been in the surrogate’s court until now.</p>

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<p>I received this check a few weeks ago. I got a huge grant directly from the college and that left me $14,000 to pay. That’s where federal aid came in as well as a few loans.</p>

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<p>This check will be at least reflected as an asset on your FAFSA for next year. Since it was a settlement from an accident, I don’t think it is declared as income…but someone else who is better versed with current tax law regarding accident settlements will have to weigh in. I know way back in 1978 I received a small settlement from an accident, and I don’t think it was considered taxable income.</p>

<p>If this money is in your name, and the asset IS counted, it will be assessed at 20% of its value for aid purposes. But I am unclear whether the student assets are reported if you qualify for,the simplified needs test. I hope one of the posters more familiar,with simplified needs test sees this.</p>

10

<p>Given the small amount of check (small in the context of settlements) I assume that it only included personal injury claim, which is nontaxable. If punitive damages are included, I believe those are taxable.</p>

<p>Not sure how those are reported on FAFSA.</p>

11

<p>@lerkin Am I supposed to assume it was a personal injury claim or should that be verified? And if so, how? All I know is that I have always had to file taxes that reported it’s interest… so I’m guessing it is taxable?</p>

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<p>see below- If you have more questions, try studentaid.ed.gov or call the Federal Student Aid Information Center at (800) 433-3243.</p>

<p>"How the damages you receive will be recorded on the FAFSA will depend on when you receive the funds, and what you do with the funds, said Michael Pirrello, a certified financial planner with Mill Ridge Wealth Management in Chester.</p>

<p>“Wrongful death awards are not taxable to the survivor(s) as they are considered compensatory damages and as such, are income-tax exempt,” Pirrello said. “So in terms of reporting income on the FAFSA from your 2010 tax return, the award will not be reportable.”</p>

<p>Beyond income reporting, the FAFSA is also focused on assets and net worth of college families. This data helps determine potential eligibility for financial aid.</p>

<p>The FAFSA may be able to uncover a monetary legal award indirectly, so where the money from the legal settlement resides may factor in on the FAFSA, Pirrello said.</p>

<p>For example, if you received $100,000 settlement and placed that money in a bank account or bought CDs or stocks, the money will show up when you answer the questions related to your bank or investment account balances, he said. Additionally, the FAFSA will ask questions regarding net worth, so if you used the $100,000 award to pay down a mortgage or credit-card debt, your resulting net worth will be higher, so the legal award may indirectly negatively impact your FAFSA.</p>

<p>If you haven’t received the money yet, there will be no impact on the FAFSA, said Marnie Aznar, a certified financial planner with Aznar Financial Advisors in Morris Plains.</p>

<p>She said if you receive the payment during the tax year prior to the year in which you are completing the FAFSA (such as in 2011 if you are applying for 2012-2013), the information would need to be included."</p>

<p>If you have more questions, try studentaid.ed.gov or call the Federal Student Aid Information Center at (800) 433-3243.</p>

<p>[Lawsuit</a> damages could figure on FAFSA form | NJ.com](<a href=“http://www.nj.com/business/index.ssf/2011/07/lawsuit_damages_could_figure_o.html]Lawsuit”>Lawsuit damages could figure on FAFSA form - nj.com)</p>

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<p>@menloparkmom thank you so much for that link. It kind of helped. But can one help me figure whether or not I have the simplified needs test? And if I do, would they over look this? And would it be helpful to contact the financial aid office before I deposit this check anywhere?</p>

14

<p>So you have a child? That will allow you to qualify for the automatic 0 EFC. If the settlement is not taxed, you would report the money you receive as untaxed income on your 2013-14 FAFSA. If you can file a 1040A or 1040EZ in 2012 and/or have received any federal means tested benefits during the past 2 years (WIC, TANF, housing), you would qualify for 0 EFC if your AGI is low enough … which would allow the untaxed income to be ignored.</p>

<p>If you have to report it as taxable income on your 2012 1040, then you can appeal to the school next year, asking them to remove the settlement amount from income and instead count it as an asset. This would allow you more aid. It is up to the school whether or not they think this is a good idea for your situation (it is called Professional Judgment). Unfortunately, you will not get an answer on this until next spring.</p>

15

<p>@Kelsmom, I am not a mom… despite of my username, haha. It turns out that my mom made this account for me to use. Anyway, my mother has not received any federal means she’s worked long and hard for everything that we have. But I I have filed a 1040A/1040EZ to report the interest as my AGI, which was about 3k. Since I file with these forms, will I still have to ask for an appeal? (THANK YOU SO MUCH FOR THIS BTW! IT’S REALLY HELPING ME FEEL BETTER ABOUT THE SITUATION! <3)</p>

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<p>Here is the link to this year’s FAFSA formula: <a href=“http://ifap.ed.gov/efcformulaguide/attachments/010512EFCFormulaGuide1213.pdf[/url]”>http://ifap.ed.gov/efcformulaguide/attachments/010512EFCFormulaGuide1213.pdf&lt;/a&gt; Sit down with your mom, and run all of your numbers through it. The formula does change a bit every year, but this will give you a good idea of what your FAFSA EFC will look like with this money added into your family’s financial picture.</p>

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<p>Sorry … but unfortunately, the advice was only for the situation of you being a mom. Your tax filing status or receipt of means tested aid doesn’t make a difference if you are a dependent student.</p>

<p>However, since you are dependent, here is advice for that situation: You will not qualify for auto 0 yourself, but if your mom does … then you could receive a million dollars and it wouldn’t matter. Was your EFC 0 this year? If so, go to [Home</a> - FAFSA on the Web-Federal Student Aid](<a href=“http://www.fafsa.gov%5DHome”>http://www.fafsa.gov) and look at your Student Aid Report. What is the AGI? Maybe it’s auto 0 formula. If not, you can still request the change to consider the money as an asset … but unfortunately, it will be heavily counted since it will be a student asset. As a dependent student, you will get hit hard & expected to pay much of it.</p>

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<p>@happymomof1 thanks for the link. For anyone curious of where my situation may be headed I found this: [FinAid</a> | Financial Aid Applications | Maximizing Your Aid Eligibility](<a href=“Your Guide for College Financial Aid - Finaid”>Maximizing Your Aid Eligibility - Finaid) and it basically says that my mother and I do qualify for the simplified needs test “which disregards assets when determining the expected family contribution.” The problem now is figuring out how to report the $$: asset or income. And is my situation even more complex being that the $$ is in my name (I am the student… just clearing that up…) xx</p>

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<p>@Kelsmom, so my AGI was $15000 and my EFC was 0. Good news or bad?</p>

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<p>Excellent news … you most likely have an automatic 0 EFC, meaning YOUR assets are ignored. Even if your mom filed a 1040, COULD she have filed a 1040A or 1040EZ? If she had her own business or if she itemized deductions (which I doubt, at that income level)? If not, she most likely could have filed the 1040A/EZ. The way to know is to find a 1040A online, and compare it to her tax return. If everything on her 1040 could have been reported on the 1040A, she “could have filed” a 1040A. In that case, the combination of the AGI and being able to file a 1040A gives your family an automatic 0 EFC (as long as her income does not rise next year & go over $21,000). Again, that means your income and assets are ignored.</p>