2008 Woodie Awards
Taxes and financial aid go hand-in-hand
By: Anna Forder
Issue date: 3/2/06 Section: News
- Page 1 of 1
For those who may be waiting to file those tax returns until the last minute, here's an incentive to get them done early: in order to complete financial aid forms before the March 30 deadline, students are required to list their income or their parents' income if they are dependent on their parents. Income taxes help the federal government determine the amount of federal assistance students should receive under the Federal Loan Program.
Students can provide income information on their financial aid forms one of two ways: they can complete their income taxes before filling out their financial aid forms and provide the actual income on the form, or they can fill out an estimated amount of income on the form.
Director of Financial Aid Jon Gruett said there is a distinct advantage to completing income taxes before filling out the financial aid forms. If students use an estimated amount of income, this may initiate the U.S. Department of Education to request a verification on that application, according to Webster's financial aid Web site.
If the federal government decides that an application requires verification, the applicant must send in his or her tax returns, so the government can verify that the amount in the tax documents match the amount on the application forms, Gruett said.
"There's a multitude of things that could flag the federal process that the info needs verification," Gruett said.
However, Gruett said submitting the forms using an estimated income will almost definitely result in verification.
This verification process can hold up the awarding of
financial aid to the student until the figures are double checked, Gruett said.
Gruett pointed out that the March 30 financial aid deadline is before the April 15 tax deadline.
"The tax deadline is April 15 anyway, but this is just an additional incentive to get them done early," Gruett said.
If necessary, it is better for students to fill out the FAFSA application with an estimated income, instead of missing the March 30 deadline. In order to apply for financial aid, students must complete the FAFSA form as well as the Webster University Financial Aid Application.
The tax information required on these forms come from federal income taxes; financial aid requires no information about state returns. Students should not submit any tax documents unless they are asked for.
"Financial aid isn't something people are incredibly familiar with," Gruett said. He said students who have questions should contact the staff at the financial aid office in person or by phone at ext. 6992.
Tax tips to consider
1. File: Even if you didn't make enough money to file this year, you may still have a refund coming if money was withheld from your paychecks.
2. Start Early: If you have lost your W-2s or haven't received them yet, get the information you need from your last paycheck of the year. State and federal forms can be downloaded online.
3. Give yourself a weekend: Filling out tax forms doesn't take a long time, but by giving yourself a weekend to prepare your taxes, you allow yourself time to double-check your information.
4. Practice on paper: Even if you plan to file electronically, writing things down on paper will help work out any problems before you enter your information online.
5. Take extra credit: The government provides help to college students. These tax credits are available to whoever claims you on their taxes, however only one is allowed per student.
• Hope Scholarship Credit - Gives you a tax credit for up to 100 percent of your first $1,000 in tuition and fees and up to 50 percent for the second $1,000. The maximum credit is $1,500 and it applies to the first two years of college only.
• Lifetime Learning Credit - Gives you a tax credit equal to 20 percent of your tuition and certain related expenses up to $10,000. The credit maximum is $2,000.
• Higher education expenses deduction - This deduction could be as much as $4,000 for families that meet earning guidelines. If you make too much (in the IRS's eyes), you'll get a reduced deduction. The downside: Deductions usually give you less bang for your buck than credits. You get to subtract a credit amount from the actual tax you owe, whereas a deduction reduces the income you pay tax on. So in this case, even if you have $4,000 in expenses you can claim on your tax return (at the bottom of page 1 of your Form 1040), in reality this deduction would at most produce a $1,000 reduction in your tax bill if you're in the 25 percent tax bracket.
6. Understand your family's finances: If your parents pay more than 50 percent of your expenses, they are entitled to list you as a dependent. Talk to your parents to understand their financial situation and future plans.
Source: http://www.bankrate.com
Students can provide income information on their financial aid forms one of two ways: they can complete their income taxes before filling out their financial aid forms and provide the actual income on the form, or they can fill out an estimated amount of income on the form.
Director of Financial Aid Jon Gruett said there is a distinct advantage to completing income taxes before filling out the financial aid forms. If students use an estimated amount of income, this may initiate the U.S. Department of Education to request a verification on that application, according to Webster's financial aid Web site.
If the federal government decides that an application requires verification, the applicant must send in his or her tax returns, so the government can verify that the amount in the tax documents match the amount on the application forms, Gruett said.
"There's a multitude of things that could flag the federal process that the info needs verification," Gruett said.
However, Gruett said submitting the forms using an estimated income will almost definitely result in verification.
This verification process can hold up the awarding of
financial aid to the student until the figures are double checked, Gruett said.
Gruett pointed out that the March 30 financial aid deadline is before the April 15 tax deadline.
"The tax deadline is April 15 anyway, but this is just an additional incentive to get them done early," Gruett said.
If necessary, it is better for students to fill out the FAFSA application with an estimated income, instead of missing the March 30 deadline. In order to apply for financial aid, students must complete the FAFSA form as well as the Webster University Financial Aid Application.
The tax information required on these forms come from federal income taxes; financial aid requires no information about state returns. Students should not submit any tax documents unless they are asked for.
"Financial aid isn't something people are incredibly familiar with," Gruett said. He said students who have questions should contact the staff at the financial aid office in person or by phone at ext. 6992.
Tax tips to consider
1. File: Even if you didn't make enough money to file this year, you may still have a refund coming if money was withheld from your paychecks.
2. Start Early: If you have lost your W-2s or haven't received them yet, get the information you need from your last paycheck of the year. State and federal forms can be downloaded online.
3. Give yourself a weekend: Filling out tax forms doesn't take a long time, but by giving yourself a weekend to prepare your taxes, you allow yourself time to double-check your information.
4. Practice on paper: Even if you plan to file electronically, writing things down on paper will help work out any problems before you enter your information online.
5. Take extra credit: The government provides help to college students. These tax credits are available to whoever claims you on their taxes, however only one is allowed per student.
• Hope Scholarship Credit - Gives you a tax credit for up to 100 percent of your first $1,000 in tuition and fees and up to 50 percent for the second $1,000. The maximum credit is $1,500 and it applies to the first two years of college only.
• Lifetime Learning Credit - Gives you a tax credit equal to 20 percent of your tuition and certain related expenses up to $10,000. The credit maximum is $2,000.
• Higher education expenses deduction - This deduction could be as much as $4,000 for families that meet earning guidelines. If you make too much (in the IRS's eyes), you'll get a reduced deduction. The downside: Deductions usually give you less bang for your buck than credits. You get to subtract a credit amount from the actual tax you owe, whereas a deduction reduces the income you pay tax on. So in this case, even if you have $4,000 in expenses you can claim on your tax return (at the bottom of page 1 of your Form 1040), in reality this deduction would at most produce a $1,000 reduction in your tax bill if you're in the 25 percent tax bracket.
6. Understand your family's finances: If your parents pay more than 50 percent of your expenses, they are entitled to list you as a dependent. Talk to your parents to understand their financial situation and future plans.
Source: http://www.bankrate.com