I get a lot of good questions sent via comments or email and thought they might be of interest to others besides just the person who asked. So here goes:
- Q: What are the benefits of doing the FAFSA right away vs waiting?
- A: Some aid is first come, first served, including many state grants. If you are eligible for any such programs, then you should get on the FAFSA ASAP. Or you may receive a year-end bonus, have stock options vesting soon, etc. If that’s you, do it sooner rather than later. In other cases, it may be best to wait. For example, you may have some large expenses that you’ll pay sometime in the not-too-distant future, bringing down your assets. Or you may have some planning opportunities that you should take advantage of before filing such as making retirement contributions or shifting an UTMA to a 529.
- Q: Does a Coverdell ESA get treated the same as a 529?
- A: For FAFSA purposes, yes. Anywhere I’ve said 529, you can substitute Coverdell ESA.
- Q: Do I report stock options on the FAFSA?
- A: Yes for vested options, but remember to only report the net value, not the market value. The net value is market price minus strike price. If your options aren’t liquid– subject to a lockup for example– you can discount the value based on non-marketability. Check with your CPA if that applies to you.
- Q: Do I add back Roth IRA contributions to my income?
- A: No. Those are already captured in your AGI from your tax return, since they’re after-tax. Same goes for nondeductible IRA contributions.
- Q: Where do I find the amount I contributed to my 401(k) in 2017?
- A: On your 2017 W-2, in box 12.
- Q: How does a self-employed person answer the question “How much did your parent earn from working in 2017?” if the business had a loss?
- A: It’s tricky to answer that question because the form won’t take a negative number. However, you do want the $4,000 employment expense allowance against income so you don’t want to enter $0. Your best bet is to contact the Federal Student Aid Information Center. The workaround is goofy and you’ll want their guidance.
There are 4 comments
Do I report IRA CD on the FAFSA?
No. IRAs are not reported, nor are any other retirement accounts.
Thank you, I wanted to clarify that since you have to report Certificates of Deposit I wasn’t sure about IRA Certificates of Deposit. Thanks again.
What matters is the account type (IRA vs non-retirement), not what’s in the account.