Before you file your FAFSA (Free Application for Federal Student Aid), you’ll have to untangle some of the more complex financial aspects of the process. You’re asking yourself a ton of questions. Things you thought you wouldn’t have to worry about until after you graduated. What’s a dependent? What is my estimated family contribution? What is net income? Most importantly, you’ll probably be wondering: how do my taxes affect this? In many ways, filing the FAFSA is quite similar to filing your taxes. However, there are a few key differences, and it’s very important not to conflate the two processes.
Filing Taxes and Filing the FAFSA
Taxes and student loans interweave more than people usually expect and in more ways than one. It’s important to be careful, especially when filing your taxes, that you report your FAFSA assistance properly. Your taxable income will not include money gained from, for example, a Pell Grant or Stafford Loan. However, taxable income will include any money made from a work study program. That’s because work study money is considered to be a wage, and thus, taxable. You’ll have to separate money given from the federal government. Additionally, you have to separate money given by the state, if any money from the state exists.
Prior Prior Year: FAFSA & Taxes
If you’ve reported your FAFSA status properly on your taxes, things will be somewhat easier. However, if you didn’t file your taxes before starting the FAFSA process, don’t worry: starting with the 2017-18 form, you’ll be asked to submit tax information from a year earlier instead of the current calendar year. This means that you’ll be taking information from your previous year’s tax return to complete this year’s form. That, in turn, would mean that you don’t have to file your taxes from the current year to fill out the FAFSA—as long as you filed in the previous year. If you’re filing your own taxes for the first time, no worries. This policy does not apply to you. You will have to put down your current tax information on the form instead.
Some Tips to Remember While Filing
Before you start filing the FAFSA, there are certain things you’ll need to keep in mind. First of all, you do not have to worry about the tax returns from the past year as long as you have tax information from the year before that. Additionally, you’ll want to double—and triple—check your information. You want to be careful and fill out your form correctly. If you fill out the form incorrectly, your status will be up in the air for much longer, and you’ll have to wait to correct the record. As long as you’re careful, however, the FAFSA process will be relatively painless, and you’ll soon be on the way to a financial reward.
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