Dependent Simplified Worksheet A

1
Dependent Simplified Worksheet A
EFC
2
Objectives

• Calculate the EFC using Simplified Worksheet A
• Identify allowances against students and
  parents income
• Evaluate inclusion of untaxed income from FAFSA
  worksheets A, B, and C

3
Scenario 1

• Dependent student
• AR residents
• Single parent (mother) is 49
• Parents AGI 38,340
• Filed 1040A
• Students income 4,200
• Household size 3
• Number in college 1

4
Formula Determination
Live Meeting Poll

• Which formula should be applied using the
  information provided?
• Regular
• Simplified
• Automatic Zero

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5
Scenario 1 Answer

• Formula to use Simplified
• Why
• Parents filed 1040A
• Parents income under 49,999

6
Dependent Simplified - Income
38,340
42,600
42,600
38,340
0
38,340
0
38,340
7
State and Other Tax Allowances
6,151
AR Tax Rate 3 .03 X 38,340 1,150
1,150

8
Social Security Tax Allowance
6,151
1,150
.0765 X 42,600 3,259
3,259

9
Income Protection Allowance
6,151
1,150
3,259
18,680

10
Employment Expense Allowance
6,151
1,150
3,259
18,680
.35 X 42,600 14,910
14,910
3,200
11
Total Allowances
6,151
1,150
3,259
18,680
14,910
3,200
32,440
12
Available Income
38,340
32,440
5,900
13
Parents Contribution
5,900
5,900
.22 X 5,900 1,298
1,298
2
7874
14
Parents Contribution
5,900
5,900
1,298
1

1,298
15
Students Income
4,200
4,200
4,200
0
4,200
625
3,575
16
Allowances Against Student Income
AR Tax Rate 3 .03 X 3,575 107
418
107
.0765 X 4,200 321
321
0
3,171
17
Allowances Against Student Income
418
107
321
0
3,846
18
Students Contribution from Income
3,575
3,846
-271
0
19
Expected Family Contribution
1,298
0

1,298
20
Scenario 2 Activity

• Complete the Simplified Worksheet A activity
  located on PW page 3-3

21
Scenario 2 Activity Debrief

• Dependent student
• KY residents
• Parents AGI 28,600
• Filed 1040A
• Students income 7,680
• Household size 3
• Number in college 1

22
Total Income
28,600
28,600
28,600
28,600


0
28,600
0
28,600
23
State and Other Tax Allowance
3,916
KY Tax Rate 4 .04 X 28,600 1,144
1,144

24
Social Security Tax Allowance
3,916
1,144
.0765 X 28,600 2,188
2,188

25
Income Protection Allowance
3,916
1,144
2,188
18,680

26
Employment Expense Total Allowances
3,916
1,144
2,188
18,680
.35 X 28,600 10,010
10,010
3,200
29,128
27
Available Income
28,600
29,128
-528
28
Parents Contribution
-528
-528
.22 X -528 -116
0
2
7874
29
Parents Contribution
-528
-528
0
1
0
30
Students Income
7,680
7,680
7,680
0
7,680
800
6,880
31
Allowances Against Student Income
KY Tax Rate 4 .04 X 6,880 275
774
275
.0765 X 6,880 526
526
0
3,171
32
Allowances Against Student Income
774
275
526
528
5,103
33
Students Contribution from Income
6,880
5,103
1,777
889
34
Expected Family Contribution
0
889

889
35
Compare EFC Between Scenarios

• Scenario 1
• No student contribution

1,298
0

1,298

• Scenario 2
• No parent contribution
• Negative parents AAI
• Higher student income

0
889

889
10,434
36
Impact of Parents Income
Excluding Negative Parents Income
Including Negative Parents Income
774
774
275
275
526
526
0
528
4,575
5,103
6,880
6,880
4,575
5,103
2,305
1,777
1,153
889
Difference 1,153 889 263