Lizard Queen
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Post by Lizard Queen on Mar 20, 2021 22:05:16 GMT -5
Yeah, we're thinking my DH may be able to retire that year, but I don't know if I could get my income down low enough so they don't look at our retirement accounts. I'm not sure about that threshold, though. They never consider retirement accounts or home equity in your primary residence. If you can get AGI below 50K and don't have to file schedule 1 with your 1040 (with a few exceptions like if you need to to claim unemployment or an IRA contribution) all assets are ignored. Of course this could all change by the time you're getting serious and probably will. There's a big reform of the form coming up next year, so I'm anxious to see what that looks like. Thanks. I think I should try to get more out of my inherited ira, and have my dh offset that income by increasing his 401k.
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 20, 2021 22:10:59 GMT -5
They never consider retirement accounts or home equity in your primary residence. If you can get AGI below 50K and don't have to file schedule 1 with your 1040 (with a few exceptions like if you need to to claim unemployment or an IRA contribution) all assets are ignored. Of course this could all change by the time you're getting serious and probably will. There's a big reform of the form coming up next year, so I'm anxious to see what that looks like. Thanks. I think I should try to get more out of my inherited ira, and have my dh offset that income by increasing his 401k. Unfortunately, unless you can get all the way down to Auto Zero levels (27K AGI), then they add everything you put into a 401K back onto your AGI for calculating EFC so contributing more to retirement doesn't help, it just reduces what you have to cashflow for school. Btw, everything I'm talking about is referring to how public colleges handle things. Private schools often do things differently and dig more deeply into finances.
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Lizard Queen
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Post by Lizard Queen on Mar 20, 2021 22:27:37 GMT -5
Thanks. I think I should try to get more out of my inherited ira, and have my dh offset that income by increasing his 401k. Unfortunately, unless you can get all the way down to Auto Zero levels (27K AGI), then they add everything you put into a 401K back onto your AGI for calculating EFC so contributing more to retirement doesn't help, it just reduces what you have to cashflow for school. Btw, everything I'm talking about is referring to how public colleges handle things. Private schools often do things differently and dig more deeply into finances. Ugh, yeah, that's not gonna work. I guess we'll see when the time comes.
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Lizard Queen
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Post by Lizard Queen on Mar 21, 2021 9:06:41 GMT -5
Unfortunately, unless you can get all the way down to Auto Zero levels (27K AGI), then they add everything you put into a 401K back onto your AGI for calculating EFC so contributing more to retirement doesn't help, it just reduces what you have to cashflow for school. Btw, everything I'm talking about is referring to how public colleges handle things. Private schools often do things differently and dig more deeply into finances. Ugh, yeah, that's not gonna work. I guess we'll see when the time comes. Oh, wait. I keep forgetting about the standard deduction. I just might get there, barring any big raises.
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 21, 2021 10:09:20 GMT -5
Ugh, yeah, that's not gonna work. I guess we'll see when the time comes. Oh, wait. I keep forgetting about the standard deduction. I just might get there, barring any big raises. Hate to shoot you down again, but the standard deduction doesn't change AGI. Just taxable income.
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Lizard Queen
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Post by Lizard Queen on Mar 21, 2021 10:19:19 GMT -5
Oh, wait. I keep forgetting about the standard deduction. I just might get there, barring any big raises. Hate to shoot you down again, but the standard deduction doesn't change AGI. Just taxable income. Yeah, I just realized that again. I obviously don't do the taxes in our household. ETA: this worries me, because I did a quick calculator that said our EFC would be $60k under one scenario and around $40k under another. Maybe I did that wrong, because what the everliving fuck. We don't really make that much, and don't have pensions to rely on.
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 21, 2021 10:44:05 GMT -5
Hate to shoot you down again, but the standard deduction doesn't change AGI. Just taxable income. Yeah, I just realized that again. I obviously don't do the taxes in our household. ETA: this worries me, because I did a quick calculator that said our EFC would be $60k under one scenario and around $40k under another. Maybe I did that wrong, because what the everliving fuck. We don't really make that much, and don't have pensions to rely on. I'm guessing you did that wrong because a 60K EFC would be for about someone with a 200K income with 200K in non-retirement accounts. However...remember that anything above about 6K EFC doesn't really matter much anyhow as far as federal aid. That's the cut off for the Pell grant and no FAFSA only school except University of Chicago meets full need. Basically all aid once you get an EFC in the double digits is going to be loans.
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Lizard Queen
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Post by Lizard Queen on Mar 21, 2021 11:43:05 GMT -5
Yeah, I just realized that again. I obviously don't do the taxes in our household. ETA: this worries me, because I did a quick calculator that said our EFC would be $60k under one scenario and around $40k under another. Maybe I did that wrong, because what the everliving fuck. We don't really make that much, and don't have pensions to rely on. I'm guessing you did that wrong because a 60K EFC would be for about someone with a 200K income with 200K in non-retirement accounts. However...remember that anything above about 6K EFC doesn't really matter much anyhow as far as federal aid. That's the cut off for the Pell grant and no FAFSA only school except University of Chicago meets full need. Basically all aid once you get an EFC in the double digits is going to be loans. Alright. I put in some actual numbers from prior tax years, and got $22k and $13k. My inherited IRA jumped up in value, and we have a lot of cash in various accounts. I really wanted to keep the ira long-term, but may have to get it way down. We've already been looking at getting a bigger house. Not a whole lot left on our mortgage at this point. I really wish I had looked at this at the end of last year.
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 21, 2021 11:54:07 GMT -5
I'm guessing you did that wrong because a 60K EFC would be for about someone with a 200K income with 200K in non-retirement accounts. However...remember that anything above about 6K EFC doesn't really matter much anyhow as far as federal aid. That's the cut off for the Pell grant and no FAFSA only school except University of Chicago meets full need. Basically all aid once you get an EFC in the double digits is going to be loans. Alright. I put in some actual numbers from prior tax years, and got $22k and $13k. My inherited IRA jumped up in value, and we have a lot of cash in various accounts. I really wanted to keep the ira long-term, but may have to get it way down. We've already been looking at getting a bigger house. Not a whole lot left on our mortgage at this point. I really wish I had looked at this at the end of last year. You wouldn't include the inherited IRA in your assets on the FAFSA, just distributions from it which would be income.
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Lizard Queen
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Post by Lizard Queen on Mar 21, 2021 12:04:22 GMT -5
Alright. I put in some actual numbers from prior tax years, and got $22k and $13k. My inherited IRA jumped up in value, and we have a lot of cash in various accounts. I really wanted to keep the ira long-term, but may have to get it way down. We've already been looking at getting a bigger house. Not a whole lot left on our mortgage at this point. I really wish I had looked at this at the end of last year. You wouldn't include the inherited IRA in your assets on the FAFSA, just distributions from it which would be income. Seriously? That's awesome! Never would have guessed that. Thanks for the info!
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 21, 2021 12:05:44 GMT -5
Yep, any retirement accounts, even inherited are excluded.
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Lizard Queen
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Post by Lizard Queen on Mar 21, 2021 12:08:59 GMT -5
Yep, any retirement accounts, even inherited are excluded. It's weird. It was my dad's retirement account, not mine. I'm not going to complain, though! I always intended to keep it for my own retirement. And now my EFC is down to $4000 for the last income scenario.
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 21, 2021 12:18:47 GMT -5
4K is a lot better number than 60K! Now if you want a better idea of what that actually means as far as what schools will expect you to pay, you can Google "net price calculator" and whatever college you're thinking of. All the schools have them. A lot of them will just let you input a known EFC along with a few other questions and give an estimate of what your cost will be. You might have to guess on GPA and test scores if they have those questions for auto merit.
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teen persuasion
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Post by teen persuasion on Mar 21, 2021 15:55:36 GMT -5
Thanks. I think I should try to get more out of my inherited ira, and have my dh offset that income by increasing his 401k. Unfortunately, unless you can get all the way down to Auto Zero levels (27K AGI), then they add everything you put into a 401K back onto your AGI for calculating EFC so contributing more to retirement doesn't help, it just reduces what you have to cashflow for school. Btw, everything I'm talking about is referring to how public colleges handle things. Private schools often do things differently and dig more deeply into finances. The Simplified Needs Test AGI threshold is going from $50k to $60k (and has a new name I can't remember). The auto SAI = 0 is now based on a percentage of federal poverty level for the correct family size. Yay, no more one size fits no one $27k! It's 175% of FPL for married couples, and 225% for single parents. The income protection amount is increasing something like 20%, so your SAI should be lower than current rule EFC. But there's no more multi child discount, though they did get rid of the multi student reduction in income protection to somewhat compensate. They also got rid of the state tax proxy figure - boo, that was helpful because NY has the highest rate. But, yeah, I'm waiting to see how everything's really going to be implemented. The devil's in the details, and it's this year's tax income that will hit that first new FAFSA.
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 21, 2021 16:45:28 GMT -5
Unfortunately, unless you can get all the way down to Auto Zero levels (27K AGI), then they add everything you put into a 401K back onto your AGI for calculating EFC so contributing more to retirement doesn't help, it just reduces what you have to cashflow for school. Btw, everything I'm talking about is referring to how public colleges handle things. Private schools often do things differently and dig more deeply into finances. The Simplified Needs Test AGI threshold is going from $50k to $60k (and has a new name I can't remember). The auto SAI = 0 is now based on a percentage of federal poverty level for the correct family size. Yay, no more one size fits no one $27k! It's 175% of FPL for married couples, and 225% for single parents. The income protection amount is increasing something like 20%, so your SAI should be lower than current rule EFC. But there's no more multi child discount, though they did get rid of the multi student reduction in income protection to somewhat compensate. They also got rid of the state tax proxy figure - boo, that was helpful because NY has the highest rate. But, yeah, I'm waiting to see how everything's really going to be implemented. The devil's in the details, and it's this year's tax income that will hit that first new FAFSA. I knew they were changing auto zero with the reform but didn't pay attention to the specifics because I knew we'd still be under. I just ran the calculation now and it's over 49K AGI for my family of 3. Holy cow! That really loosens things up and will make a lot more eligible. I won't trust anything until I see the formula that gets released next Summer though. 😉
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Rukh O'Rorke
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Post by Rukh O'Rorke on Mar 22, 2021 11:59:22 GMT -5
Good to know. I'm a ways off, but do hope to retire way before my retirement age. Currently only have 11 years at a full wage. Have some years of only a few thousand of earnings, but I'll definitely have some 0s if I retire before 60. Though I still have some salary jumps I should make so my future income is likely to counter balance that better. I crunched the numbers. In order to max to the 2nd bend, you need total indexed wages for 35 years to be $2,266,740, which averages to $64,764/ year. Here's how to calculate the index: www.fool.com/retirement/social-securitys-bend-points-what-are-they.aspxthanks for this, good information. What is counted as the indexed wages? I think insurance premiums are usually not these days, and it looks like not 401k? I can't make sense of my earnings, goes up and down on the ss statement when it was the same gross... I wish I'd kept track, but now I'll never know how much my lifetime earnings are!
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tallguy
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Post by tallguy on Mar 22, 2021 13:14:00 GMT -5
thanks for this, good information. What is counted as the indexed wages? I think insurance premiums are usually not these days, and it looks like not 401k? I can't make sense of my earnings, goes up and down on the ss statement when it was the same gross... I wish I'd kept track, but now I'll never know how much my lifetime earnings are! Social Security wages are all wages subject to the FICA tax. It is generally for most people the same as gross wages as long as they are under the limit. Whether you defer money into a 401k or have other deductions has no effect on the number. Each year's earnings then has an index factor applied to it.
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Lizard Queen
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Post by Lizard Queen on Mar 22, 2021 13:28:30 GMT -5
I think HSA contributions effect it somehow. We haven't looked into it too much, but looks that way for my DH.
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jeffreymo
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Post by jeffreymo on Mar 22, 2021 13:28:33 GMT -5
thanks for this, good information. What is counted as the indexed wages? I think insurance premiums are usually not these days, and it looks like not 401k? I can't make sense of my earnings, goes up and down on the ss statement when it was the same gross... I wish I'd kept track, but now I'll never know how much my lifetime earnings are! Social Security wages are all wages subject to the FICA tax. It is generally for most people the same as gross wages as long as they are under the limit. Whether you defer money into a 401k or have other deductions has no effect on the number. Each year's earnings then has an index factor applied to it. [br I’m not sure how self employment wages are reported but if you work for a company that has a CAFE 125 health plan the amount of wages reported to SSA are your gross wages plus the taxable value of group term life premiums that your employer provides, minus the pre-tax med deductions and HSA or FSA deductions.
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minnesotapaintlady
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Post by minnesotapaintlady on Mar 22, 2021 14:01:18 GMT -5
I think HSA contributions effect it somehow. We haven't looked into it too much, but looks that way for my DH. FSA and HSA are not part of SS wages. I just added mine all up from the SS page. 788K for 34 years of my life. Even adding in some for FSA and the 10K or so for HSA...that sucks.
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justme
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Post by justme on Mar 22, 2021 16:05:40 GMT -5
Assuming you use payroll deductions for them. I'm pretty sure if you put money in your HSA outside of payroll you don't get FICA refunded to you.
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TheOtherMe
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Post by TheOtherMe on Mar 22, 2021 17:04:25 GMT -5
Self employment earnings are reported to Social Security based on the net income reported on your tax return.
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teen persuasion
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Post by teen persuasion on Mar 22, 2021 19:04:03 GMT -5
I think HSA contributions effect it somehow. We haven't looked into it too much, but looks that way for my DH. FSA and HSA are not part of SS wages. I just added mine all up from the SS page. 788K for 34 years of my life. Even adding in some for FSA and the 10K or so for HSA...that sucks. You have to multiply each year by the wage inflation percentage.
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plugginaway22
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Post by plugginaway22 on Mar 23, 2021 6:04:49 GMT -5
Speaking of HSA accounts, ours has really grown and it is embarrassing to say that we have never invested the funds in it. At this point we are looking at it as retirement money available at age 65, so I need to put it into something. Any suggestions? We are age 60, maybe just a target fund would be better than nothing.
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