Form 1098-T is a tuition statement that students receive from their college. It serves two primary purposes: Documenting eligibility to claim the American Opportunity Tax Credit or Lifetime Learning Credit Documenting that the student was enrolled in a college and that 529 withdrawals up to net cost of attendance are therefore qualified Form 1098-T isn’t filed with your taxes; instead,…
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Tax Credits and Deductions
Filing the FAFSA raises tons of questions for divorced parents. Here are some answers. Do both parents need to fill it out? The FAFSA only requires the “custodial” parent to provide income and asset data. The CSS Profile requires both parents to fill it out. Which parent is the custodial parent? Currently, the FAFSA says the custodial parent is the…
Generally the FAFSA does not count untaxed social benefits as income. Untaxed Social Security, SSI, foster care benefits and welfare payments are excluded from income for the FAFSA, although disability payments and worker’s comp– which are insurance benefits– are added back. Normally unemployment income is taxable so this exclusion would not apply. However, the American Rescue Plan made 2020 unemployment…
Many families– and also many financial professionals– believe that reducing their adjusted gross income by increasing 401k contributions will result in a lower Expected Family Contribution from the FAFSA. Unfortunately that’s not the case: the FAFSA uses total income, not adjusted gross income. What does that mean for non-finance nerds? The FAFSA calculates “Available Income”– the income you could spend…
That title was a trick. I’m actually going to write about how much you should contribute to a 529 first. Lately I’ve heard versions of the same question again and again: After a year of no travel, eating out or other activities, people are sitting on extra cash that they want to direct towards college. Many are wondering what’s the…