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 might be asking yourself a ton of questions, including things you thought you wouldn’t have to worry about until after you graduated. What’s a dependent? What is net income? Perhaps most importantly, you’ll probably be wondering how do my taxes affect this? In many ways, filing the FAFSA is similar to filing your taxes. However, there are some key differences, and it’s important not to conflate the two processes.
Your taxes and the student loan process are tied in more ways than one. It’s important to be careful, when filing your taxes, that you report your FAFSA assistance properly. Your taxable income will not include money gained from, say, a Pell Grant or Stafford Loan, but it will include any money made from a work study program, since work study money is considered to be a wage. You’ll also have to separate money given from the federal government and money given by the state, if the latter exists.
Prior Prior Year: FAFSA & Taxes
If you’ve reported your FAFSA status properly on your taxes, things will be somewhat easier, but 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 2016 tax return to complete the 2017-18 form, which, 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, this does not apply to you; you will have to put down your current tax information on the form.
The 2018 FAFSA deadline is midnight on Saturday, June 30, which allows students plenty of time to get the form in order. You’ll need your tax return from 2016, as well as the other information the form requires, to give a sense of how much money you’ll be awarded by FAFSA.
Before you start the form, there are certain things you’ll need to remember. 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. 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 painless, and you’ll be on the way to a financial reward.
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