# Presentation: 068111

## Dependent Regular Worksheet A

***EFC:***

## Objectives

- Calculate the EFC using Worksheet A
- Identify allowances against student’s and parent’s income
- Evaluate impact of assets for both parents and students
- Evaluate inclusion of untaxed income from FAFSA worksheets A, B, and C

## Formula Review

- Regular
- Simplified
- Automatic zero

## Scenario 1

- Dependent student
- FL residents
- Age of older parent 52
- Parent’s AGI $78,000
- Filed 1040
- Student’s income $2,240
- Household size 5
- Number in college 2
- Investments of $28,000
- Ownership of a small business with 105 full-time employees worth $122,000

## Formula Determination

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

**Live Meeting Poll**

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## Scenario 1 – Poll Answer

- Formula to use – Regular
- Why
- Parents filed 1040
- Parents’ income over $49,999

## Dependent Regular - Income

***78,000***

***34,000***

***44,000***

***78,000***

***78,000***

***   ***

***       ***

## Untaxed Income and Benefits

***78,000***

***34,000***

***44,000***

***78,000***

***78,000***

***0***

***1,600***

***   ******1,600***

***       ***

## Taxable and Untaxed Income

***78,000***

***34,000***

***44,000***

***78,000***

***78,000***

***0***

***1,600***

***   ******1,600***

***79,600***

***       ***

## FAFSA Worksheet C / Total Income

***78,000***

***34,000***

***44,000***

***78,000***

***78,000***

***0***

***1,600***

***   ******1,600***

***79,600***

***       ******52***

***79,548***

## State and Other Tax Allowances

***3,650***

***   ******795***

***  ***

**FL Tax Rate: 1%**
**.01 X 79,548 = 795**

## Social Security Tax Allowance

***3,650***

***   ******795***

***2,601***

***3,366***

***  ***

**.0765 X 34,000 = 2,601**

**.0765 X 44,000 = 3,366**

## Income Protection Allowance

***3,650***

***   ******795***

***2,601***

***3,366***

***24,660***

*** ***

## Employment Expense Allowance

***3,650***

***   ******795***

***2,601***

***3,366***

***24,660***

***11,900***

***  ******3,200***

**.35 X 34,000 = 11,900**

## Total Allowances

***3,650***

***   ******795***

***2,601***

***3,366***

***24,660***

***11,900***

***  ******3,200***

***38,272***

## Available Income

***79,548***

***38,272***

***41,276***

## Income Calculation

- If total income increases by $20,000, will the Available Income also increase by $20,000?

## Income Calculation Answer

- If total income increases by $20,000, will the Available Income also increase by $20,000?
- Not if the increase is due to earned income.
- The increase in available income would be proportional based on the state and Social Security allowance calculations.

## State and Other Tax Allowance

- Would the EFC be higher or lower if the state of residence were New Jersey instead of Florida?

## State and Other Tax Allowance Answer

- Would the EFC be higher or lower if the state of residence were New Jersey instead of Florida?
- The EFC would be lower.
- Florida’s allowance offset is 1% and New Jersey’s is 7% for income over $15,000.

**FL Tax Rate: 1%**
**.01 X 79,548 = 795**

**NJ Tax Rate: 7%**
**.07 X 79,548 = 5,568**

## Parents’ Contribution from Assets

***3,200***

***28,000***

***122,000***

***50,500***

***81,700***

**122,000 – 105,000 = 17,000**
**.50 X 17,000 = 8,500**
**42,000 + 8,500 = 50,500**

## Parents’ Contribution from Assets

***3,200***

***28,000***

***122,000***

***50,500***

***81,700***

***51,500***

## Parents’ Contribution from Assets

***3,200***

***28,000***

***122,000***

***50,500***

***81,700***

***51,500***

***30,200***

***3,624***

## Parents’ Contribution

***41,276***

***3,624***

***44,900***

***15,700***

***2***

***7874***

**44,900 – 27,100 = 17,800**
**.47 X 17, 800 = 8,366**
**7,334 + 8,366 = 15,700**

## Parents’ Contribution

***41,276***

***3,624***

***44,900***

***15,700***

***2***

***7,850***

## Student’s Income

*** ***

***2,240***

***2,240***

***       ******0***

***2,240***

***         ******0***

***2,240***

## Allowances Against Student Income

***     ******0***

***    ******0***

***171***

***      ******0***

***3,171***

**.0765 X 2,240 = 171**

## Allowances Against Student Income

***     ******0***

***    ******0***

***171***

***      ******0***

***3,171***

## Student’s Contribution from Income

***0***

***3,171***

***-931***

***2,240***

## Student’s Contribution from Assets

***        ******0***

***12,800***

*** ***

***12,800***

***    ******2,560***

## Expected Family Contribution

***7,850***

***       ******0***

***  ******2,560***

***10,410***

## Asset Conversion Rate

**An asset of $10,000 would likely result in a higher EFC for a dependent student**
**if reported as a parent's asset**
**if reported as a student's asset**

**Live Meeting Poll**

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## Effect of Change in Student Assets

***        ******0***

***12,800***

*** ***

***12,800***

***    ******2,560***

***7,850***

***       ******0***

***  ******2,560***

***10,410***

***        ******0***

***       ******0***

*** ***

***       ******0***

***    ******    ******0***

*** ******8,235***

***       ******0***

***        ******0***

*** ******8,235***

## Scenario 2 – Activity

- Complete the Regular Worksheet A activity located on PW page 2-3

## Scenario 2 – Activity Debrief

- Dependent student
- OH residents
- Age of older parent 52
- Parent’s AGI $100,800
- Filed 1040
- Student’s income $3,290
- Household size 5
- Number in college 2

## Total Income

***100,800***

***62,000***

***50,000***

***112,000***

***100,800***

*** ***

*** ***

***         ******0***

***100,800***

***          ******0***

***100,800***

## Total Allowances

***6,200***

***5,040***

***17,500***

***  ******3,200  ***

**OH Tax Rate: 5%**
**.05 X 100,800 = 5,040**

**.0765 X 62,000 = 4,743**

**.0765 X 50,000 = 3,825**

***4,743***

***3,825***

***24,660***

*** ******47,668***

**.35 X 50,000 = 17,500**

## Available Income

***100,800***

***47,668***

***53,132***

## Parents’ Contribution from Assets

***3,200***

***       ******0***

*** ***

***        ******0***

***  ******3,200***

***51,500***

***-48,300***

***       ******0***

## Parents’ Contribution

***53,132***

***       ******0 ***

***19,569***

***2***

***9,785***

**53,132 – 27,100 = 26,032**
**0.47 X 26,032 = 12,235**
**7,334 + 12,235 = 19,569**

***53,132***

## Student’s Income

*** ***

***3,290***

***       ******0***

***  ******1,050***

***2,240***

***3,290***

***3,290***

***3,290***

## Allowances Against Student Income

***     ******328***

***     ******90***

***    ******252***

***      ******0***

***3,670***

**.0765 X 3,290 = 252**

**OH Tax Rate: 4%**
**.04 X 2,240 = 90**

## Student’s Contribution from Income

***0***

***3,670***

***-1,430***

***2,240***

## Student’s Contribution from Assets

***        ******50***

***3,075***

*** ***

***  ******3,125***

***       ******625***

## Expected Family Contribution

***9,785***

***       ******0***

***      ******625***

***10,410***

## Compare EFC Between Scenarios

***9,785***

***       ******0***

***      ******625***

***10,410***

***7,850***

***       ******0***

***  ******2,560***

***10,410***

- Scenario 1
- Lower income
- High parental assets
- Higher student assets

- Scenario 2
- Higher income
- Low parental assets
- Lower student assets