Are you filing your FAFSA and trying to calculate yours or your parents individual income from a joint return? Here’s our hassle-free guide on what it means to file jointly on the FAFSA and how to calculate individual income from your joint return.
What is the FAFSA and Why You Should be Filing it
The benefits to filling out the FAFSA and what its application entails
The Free Application for Federal Student Aid, often simplified to FAFSA, is a form for both undergraduate and graduate students to fill out in order to receive federal aid towards their education. The application involves reporting household income -- including parents’ income as well as the student’s. The application involves referring to tax information like W2’s and tax returns, and it asks for other general information about the student.
Filling out the FAFSA is absolutely essential to receive funds towards college; it qualifies students for grants, subsidized and unsubsidized loans, work studies, and more. The FAFSA is required of students from both private, public, and state-affiliated universities and can be filled out by students of all financial backgrounds.
By not taking the time to fill out a FAFSA each year, you could be missing out on opportunities to finance your education, so make sure to set aside some time each year to complete it. When you’re filling it out, it’s vital to complete each part of it carefully, avoiding any possible errors. Avoiding errors helps for the FAFSA to process more quickly, but if any mistakes are made on it, you can always go back and adjust your responses.
For more information about the FAFSA, check out our guide to the application.
What it Means to File Jointly
The difference between filing jointly and separately, and how it can affect your financial aid
There are multiple different situations that can be described on the FAFSA, depending on the type of student you are, your marriage status, and how old you are. If you’re an undergraduate student and are still a dependent of your parents, then your parents’ income will be included on your application. Whether your parents are divorced, separated, or married, both of their incomes will need to be reported on the application in order for the FAFSA to represent an accurate picture of your household income.
Filing jointly through the FAFSA implies that your parents’ income was reported from one joint tax form. This tax form, many times a 1040 tax form, combines both parents’ income and reports their adjusted gross income in one amount. This number can be used on your FAFSA, depending on how your application was filled out.
A quick and easy tool that FAFSA recently introduced for their applicants is the IRS Data Retrieval Tool, which speeds up the application process by taking data from the IRS’s database and putting it directly into a student’s FAFSA. Because this process allows only verified tax information to be added to the FAFSA, little to no mistakes occur with the income section of the application. All applicants can choose whether or not to report data this way, or they can opt to retrieve their income data through the online tool regardless of whether their parents choose to.
By using the IRS Data Retrieval Tool, students can cut out any extra time that it takes to calculate or find paperwork to report their income, their parents income, or other pieces of information from their tax documents.
Aside from how you can file your FAFSA, it’s important to understand the difference between filing jointly or separately, and how it affects aid packages. If you are a dependent of your parents, whether they file their income taxes as married or separately will have no affect on your aid package whatsoever. Both parents’ incomes will be filled regardless of whether they filled out tax forms together or independently, so this ultimately will have no impact.
If you are at least 24 years old or are married, or fall under any of these categories, then you are considered an independent. Students who qualify as independent will only report their income or theirs and their spouses income on FAFSA, and should not include any information about their parents’ income.
Calculating Individual Income from a Joint Return
How to estimate individual income from a joint tax return, as well as other tax filing statuses
If you’re looking to calculate your estimated income from a joint return in order to report your income separately on your FAFSA, there are a few ways that you can go about finding it.
The first way to find yours, or your spouses, or perhaps your parents’ individual incomes is by referring to their W2s from their employers. Every person who is employed and is a part of a payroll for a business will receive an individual W2 in order to accurately report the income they brought in from that specific job.
You can also find their annual earnings through their tax return for the year that the FAFSA applies to, and it should be one of the first lines of their return under wages, salaries, and tips. If your parent has received any other type of form that lists their annual income, those may be used as well.
If the person’s income that you are trying to calculate has multiple W2’s due to them being employed by multiple places, then add the amount under the wages, salaries, and tips line of the form together to get their gross income.
Additionally, make sure to include any information about farms, family-owned businesses, or any other significant source of income brought in by you or your parents. While there are questions that specifically ask about this on the FAFSA, it’s important to know how they factor into your gross income based on what forms you’re looking at to fill out the application. If you are only using W2’s or similar forms to find your income or your parents income and they utilize a separate source for their income, that information must be included as well.
If your parent or parents did not file their taxes, then you can find each parent’s individual W2’s and sum them together in order to fill out their information section of the aid application. Their income should be found on lines one and eight of their W2’s, and again, a W2 only shows what one person made at a specific job.
With this information, filling out the sections of the FAFSA detailing each parent’s individual income should be just a little bit easier. If you are still struggling to separate your parents’ income on the application, consider using the IRS Data Retrieval tool. This method saves time and eliminates any room for error, making the process of filing for financial aid way less of a headache.
With a little more information about the FAFSA, what it’s used for, and how to calculate individual income from a joint return, you’ll be well on your way to taking control of financing your education.