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Step 4 |
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Your parents must provide financial information in Step Four if you are a dependent student. The EFC calculation, determined by congressional formula, uses a family's income, household size, and certain expenses to determine if the family has discretionary income. If the family has discretionary income, a portion, and only a portion, of that income is included in the EFC as available for a student's educational costs.
Question 60 Parents' Marital Status as of Today - The FAFSA asks about parents' marital status because their marital status directly affects the treatment of income and assets in the EFC calculation. Marital status cannot be projected-your parent(s) must report their marital status as of the date the application is completed. Enter "married" if your parents are currently married. If you give information about your mother and stepfather, you would enter "married" because your mother and stepfather are married. If your parents are living together and have not been formally married but meet the criteria in their state for a common-law marriage, they should report their status as married on the application. If the state does not consider the situation to be a common-law marriage, then file the FAFSA as if they are separated. Check with the appropriate state agency concerning the definition of a common-law marriage. If your parent is single, you should enter "single" for this parent. If your parents are divorced or separated, you should enter "divorced/separated." Likewise, if your parent is widowed, you should enter "widowed." Question 61 Father's/Stepfather's Social Security Number - Enter your father's or stepfather's Social Security Number (SSN) (that is, enter the information for the same person whose financial information you are reporting). The Privacy Act gives information about how his SSN can be used. For more information, call the Social Security Administration at 1-800/772-1213 or go to their web site at http://www.ssa.gov Question 62 Father's/Stepfather's Last Name - Enter your father's or stepfather's last name (that is, enter the information for the same person whose financial information you are reporting). Use the proper name found on his Social Security card. Your father's or stepfather's SSN and last name on the application must match the number and name on his Social Security card. For information on how to update information on his Social Security card, he can call the Social Security Administration at 1-800/772-1213 or go to their web site at http://www.ssa.gov Question 63 Mother's/Stepmother's Social Security Number - Enter your mother's or stepmother's Social Security Number (SSN) (that is, enter the information for the same person whose financial information you are reporting). The Privacy Act gives information about how her SSN can be used. For more information, call the Social Security Administration at 1-800/772-1213 or go to their web site at http://www.ssa.gov Question 64 Mother's/Stepmother's Last Name - Enter your mother's or stepmother's last name (that is, enter the information for the same person whose financial information you are reporting). Use the proper name found on her Social Security card. Your mother's or stepmother's SSN and last name on the application must match the number and name on her Social Security card. For information on how to update information on her Social Security card, she can call the Social Security Administration at 1-800/772-1213 or go to their web site at http://www.ssa.gov Question 65 Number in Parents' Household - The number of family members reported determines the income protection allowance that will be subtracted from your family's income to account for basic living expenses. The following persons are included in your parents' household size:
To determine whether to include children in the household size, the "support" test is used (rather than a residency requirement) because there may be situations in which a parent supports a child who does not live with him or her, especially in cases where the parent is divorced or separated. In such cases, the parent who provides more than half of the child's support may claim the child in his or her household size. It does not matter which parent claims the child as a dependent for tax purposes. If your parent receives benefits (such as Social Security or AFDC payments) in the child's name, these benefits must be counted as parental support to the child. Support includes money, gifts, loans, housing, food, clothes, a car, medical and dental care, payment of college costs, etc. Question 66 Number of College Students in Parents' Household - This question asks about the number of household members who, in 2000-2001, are or will be enrolled in a postsecondary school. Do not include your parents. To be counted, the enrolled household member(s) (excluding your parents) must be attending at least half time and working toward a degree or certificate leading to a recognized education credential at a postsecondary school eligible to participate in any of the federal student aid programs. The student applying for aid should always be included, even if he or she is enrolled less than half time. The number of family members in college directly affects your family's ability to contribute to your education costs. EFC is divided by the number of family members in college. Question 67 State of Legal Residence - Write in the two-letter abbreviation for your parents' current state of residence. Residency (domicile) is your parents' true, fixed, and permanent home. If your parents are residing in a state for the sole purpose of attending a college, do not count that state as their legal residence. If your parents are separated or divorced, use the state of legal residence for the parent whose information is reported on the form. If you are a U.S. citizen but your parents are non-citizens who have never established legal residence in the U.S., leave this question blank on the paper FAFSA. Question 68 Legal Resident Before 1995 - States have varying criteria for determining whether or not you are a resident for purposes of state financial aid. However, all states consider you to be a resident if you became a legal resident of that state more than four years ago. Select "Yes" if your parents became residents of their state before January 1, 1995 or "No" if your parents became residents of their state on or after January 1, 1995. If your parents are divorced or separated, use the date for the parent whose information is reported on the FAFSA. Question 69 Date of Legal Residence - The state where your parents live will use this information to determine whether your parents meet its specific residency requirements for state aid. If both of your parents answered "No" to the question asking if they became legal residents of their state before January 1, 1995, provide the month and year for the parent who has lived in the state the longest. Question 70 Age of Older Parent - The age of your older parent is used when calculating your EFC to determine the Asset Protection Allowance for your parents. The higher your parent's age, the higher the protection allowed against the value of your parents' assets in the EFC calculation. Question 71 Filing Return - Indicate whether or not your parents have already filed, are going to file, or will not file a tax return for 1999. Question 72 Type of Return Filed - Indicate which tax form your parents filed or will file for 1999. Question 73 Eligible to File a 1040A or 1040EZ - If your parents are eligible to file a 1040A or 1040EZ for 1999, they must indicate their eligibility to file one of these forms (even if they file a 1999 IRS Form 1040). Tax preparers often file a Form 1040 or an electronic 1040 on behalf of a tax filer, even though that person's income and tax filing circumstances would allow him or her to file a 1040A or 1040EZ. If your parents are not required to file a Form 1040, then they must indicate eligibility to file a 1040A or 1040EZ. In general, your parent(s) (whether single or married) are eligible to file a 1040A or 1040EZ if they make less than $50,000, do not itemize deductions, do not receive income from their own business or farm, and do not receive alimony or capital gains. Your parent(s) are not eligible if they itemize deductions or receive self-employment income, alimony or capital gains. Question 74 Adjusted Gross Income - Your parents must provide their adjusted gross income (AGI) for 1999, found on IRS 1040 - line 33; 1040A - line 18; 1040EZ - line 4; or Telefile - line I. If your parents do not have a 1999 tax form but will be filing one, they should use the AGI Worksheet to calculate AGI. Note that AGI includes more than just wages earned; for example, alimony, Social Security, and business income are also included. Question 75 Income Tax - Enter the amount of 1999 income tax your parents paid from IRS 1040 - line 49 plus line 51; 1040A - line 32; 1040EZ - line 10; or 1040Telefile - line K. Make sure this amount does not include any FICA, self-employment, or other taxes from Form 1040. Do not copy the amount of federal income tax withheld from a W-2 Form. Question 76 Exemptions - Enter the total amount of your parents' exemptions. Exemptions are on IRS 1040 - line 6d or 1040A - line 6d. If your parents answered "yes" on 1040EZ - line 5, use EZ worksheet Line F to determine the number of exemptions ($2750 equals one exemption). If he or she answered "no" on line 5, your parent should enter "01" if single or "02" if married. On the Telefile, your parents should use line J to determine the number of exemptions ($2750 equals one exemption). If currently divorced, separated, or widowed, but your parent has filed or will file a joint tax return for 1999, he or she should give only his or her portion of the exemptions. See "Who's a Parent?" for more information about whose information should be reported. Question 77 Earned Income Credit - Earned Income Credits are available to low-income workers who maintain a home in the U.S. and who meet other eligibility criteria defined by the IRS. Enter the Earned Income Credit (EIC) from IRS 1040 - line 59a; 1040A - line 37a; 1040EZ - line 8a; Telefile - Line L. If this question does not apply to your parents, enter zero (0). Question 78 Father's/Stepfather's Income Earned - When the Department's processor calculates your parents' EFC, certain allowances are deducted from your parents' income for required and necessary expenses (like taxes and basic living costs). The amount your parents provide for income earned from work is used to calculate these allowances according to a formula set by Congress. Your parents' income earned from work will also be used in the EFC calculation as an income factor when no AGI is reported. If your parents filed (or will file) a 1999 tax return, they should include the "wages, salaries, tips, etc." from the IRS 1040 - line 7, 1040A - line 7, 1040EZ - line 1; Telefile - use your parents' W-2 Forms. Even if your parents filed a joint return, report each parent's earnings separately. If your parents own a business or farm, they should also add in the numbers from 1040 - lines 12 and 18. If your parents will not file a 1999 tax return, they should report earnings from work in 1999. Add up the earnings from W-2 Forms and any other earnings from work that are not included on the W-2 Forms. Question 79 Mother's/Stepmother's Income Earned - Use the instructions from the "Father's/Stepfather's Income Earned" section to answer this question. Question 80 Untaxed Income and Benefits (Worksheet A) - Enter the total for Worksheet A (found on page 8 of the FAFSA). Worksheet A collects information about certain untaxed income and benefits. Your parents must be sure not to include any income or benefits already reported elsewhere on the application. Question 81 Exclusions from Taxed Income (Worksheet B) - Worksheet B on page 8 of the FAFSA will help you calculate exclusions from your parents' taxed income, such as work-study earnings. Because the items listed in this worksheet will be entered on the form and excluded from income when the Department's processor performs the EFC calculation, your parents should not subtract them from their responses to the income questions in Step Four. These amounts should be calculated on the basis of what was received between January 1, 1999 and December 31, 1999 and not what was received during the school year. Question 82 Total Current Cash, Savings and Checking Account Balance - Include the balance of checking or savings accounts as of the date the FAFSA is signed unless your parents do not have access to the money because the state declared a bank emergency due to the insolvency of a private deposit insurance fund. Question 83 Net Worth of Investments - Investments include real estate such as rental property, land, and second or summer homes. Do not include your parents' home. Include the value of portions of multifamily dwellings that are not your parents' principal residence. Investments also include trust funds, money market funds, mutual funds, certificates of deposit, stocks, bonds, other securities, education IRAs, installment and land sale contracts (including mortgages held), commodities, precious and strategic metals, etc. Do not include the value of life insurance and retirement plans (pension funds, annuities, non-Education IRAs, Keogh plans, etc.) Investment Value - Investment Debt = Net Worth of Investments Question 84 Net Worth of Business - Business value includes the current market value of land, buildings, machinery, equipment, inventories, patents, copyrights, franchises, etc. Do not include your primary home, even if it is part of the business. Business Value - Business Debt = Net Worth of Business Question 85 Net Worth of Investment Farm - An investment farm is any farm that does not meet the definition of a family farm. A family farm is a farm that is your parents' principal place of residence and one on which they materially participate in the farm's operation. Investment farms include the current market value of land, buildings, machinery, equipment, livestock, inventories, etc. When current market value for a farm is reported, it must be the amount for which the farm could sell as of the date of the application. Also, if your parents are not the sole owners of the farm, you should report only their share of the value and the debt. As noted earlier, do not report a family farm as an asset. Investment Farm Value - Investment Farm Debt = Net Worth of Investment Farm Courtesy of: "Completing the 2000-2001 FAFSA," from the U.S. Department of Education | ||
