FAFSA - 1040 and loans questions

[eikko]

I hear that the sooner you submit FAFSA the better your chances so I'm trying to get it done, but I have a couple questions I'm hoping someone can answer:

1. If you were eligible to fill out a 1040EZ or 1040A and your income is less than 50k then your assets are ignored in the EFC calculation. My income is way less than 50k but since I live outside the country, I have to file the regular 1040 return so I can claim Foreign Income Exclusion (to say that I already paid taxes in another country). The spirit of the question is to give a break to people with low work income and no alternate sources of income. So can I say 'yes, I was eligible to file a 1040EZ'?

2. Should I pay off my undergrad loans? Then my assets (savings) will be lower. I've heard that you can get credit if you already owe student loans, but is there somewhere to put that down on FAFSA?

Thank you so much to anyone who can help!

Edited February 6, 2010 by eikko

[rising_star]

This is going to sound terrible but, in all the FAFSA verifications I've done, no one has ever asked me to verify the amount of money in my savings account. If you anticipate having less in a few months than you have now, put in the amount you think you'll have.

[eikko]

This is going to sound terrible but, in all the FAFSA verifications I've done, no one has ever asked me to verify the amount of money in my savings account. If you anticipate having less in a few months than you have now, put in the amount you think you'll have.

Thanks for the reply. Yep, you are probably right and anyway they let you make corrections, so it seems like you're allowed to ballpark anyway.

[eikko]

hm, maybe my question was something that i should have asked an accountant.... any of those out there?

[wooldogg]

I had similar issues. Maybe I'm too late for you, but I'll take a crack:

1. If you were eligible to fill out a 1040EZ or 1040A and your income is less than 50k then your assets are ignored in the EFC calculation. My income is way less than 50k but since I live outside the country, I have to file the regular 1040 return so I can claim Foreign Income Exclusion (to say that I already paid taxes in another country). The spirit of the question is to give a break to people with low work income and no alternate sources of income. So can I say 'yes, I was eligible to file a 1040EZ'?

No, you can't say you were eligible to file a 1040EZ if you weren't eligible to file a 1040EZ.

2. Should I pay off my undergrad loans? Then my assets (savings) will be lower. I've heard that you can get credit if you already owe student loans, but is there somewhere to put that down on FAFSA?

I also had this problem. There is no way to deduct student loan debt from your assets (based on my reading of the fine print and an online chat with a Federal Aid rep.) I'd say it's best to pay off all the debt you can before filing the FAFSA.

[eikko]

hey wooldogg, thanks for your advice. there was a 'don't know' option for the 1040ez eligibility, so i chose that one. anyway, nice to hear some feedback!