LH loser wants Federal Financial Aid

[iplawyer]

I

am filling out a FAFSA application for student aid. I worked for two private companies earlier in the year and later in the year I started receiving Unemployment benefits for a couple months. And yes, I understand that unemployment is "taxable income" which I intend to pay tax on.

On one line it asks for your (AGI) Adjusted Gross Income:

Quote:
What is the student's (and his/her spouse's) adjusted gross income for the last calendar year?

This information may be on the following forms:

* IRS Form 1040; or
* 1040A; or
* 1040EZ.

If the student has not yet completed his/her taxes, select the Income Estimator button and answer the questions on the worksheet that is displayed.


And on the next line it asks:

Quote:
How much did the student earn from working (wages, salaries, tips, combat pay, etc.) in the last calendar year?

Answer this question whether or not the student filed a tax return.

This information may be on the W-2 Forms or on one of the following tax forms:

* IRS Form 1040; or
* 1040A; or
* 1040EZ.


I understand what I need to put on the AGI line (only the payments I received from unemployment) but on the other line I can't figure out if they are "technically" saying only "income" that comes from work at a job that would pay "wages" or do the Unemployment benefits qualify as "wages" that I "worked for". This is the only thing that is stumping me.

In a nutshell: Are Unemployment benefits considered a "Wage or Salary" that I "worked for and/or earned" or is it considered something else?

-M.
California

Is this ironic or what? They want their Federal benefits - but they don't want to pay their Federal taxes!

[Randall]

Unemplyment is something you work for????
The mind boggles.

[.]

Hey, since CtC doesn't fool the IRS, try it out on the Department of Education.

Apparently the penalty for "education" fraud (lying on a FAFSA application) is only up to 5 years in the can and up to a $20K fine. Of course, one could also be prosecuted for bank fraud and mail fraud if a fraudulent loan gets made and the prosecutor goes whole-hog. Much nastier penalties.

Since a large part of the student aid equation is dependent on income, one could posit that the DoE is staying on top of the IRS's latest lists of stupid income tax tricks. Then again, maybe not.

[Red Cedar PM]

I am not sure if this has been brought up before, but I wonder what happens when one of the LHer's goes to get a mortgage or a car loan and the loan officer requests recent tax returns? I have to think it would be a red flag if they are showing no income on their returns. I am sure that the LoserHead would argue that they do have "private sector non-federally connected earnings" or some such nonsense. In other words, I am sure these people both claim that they do and don't have income, depending on whether it will help or hurt them at the time. Hypocrisy and ad-hoc reasoning at its best.

[Nikki]

They'll do the same thing that everyone else who wants to misreport to the financial institution does: submit a bogus tax return totally different than the one they filed OR just copies of the W-2 forms.

[Evil Squirrel Overlord]

For mortgage apps, the banks are pretty straight forwards and without somebody making a career ending mistake: very few would ever get by the initial application. Bogus returns would be their only option.

[Kimokeo]

Question, and I guess this is the one that might not be answered:

If you use a bogus return and part of the paperwork requires you to sign the Form 8821 and the 4506-T for the lender to use, do they ever use it to verify the tax returns presented?

I never really thought about it as I never had to process these forms.

[Judge Roy Bean]

For mortgage apps, the banks are pretty straight forwards and without somebody making a career ending mistake: very few would ever get by the initial application. Bogus returns would be their only option.

With programs like TurboTax out there, you can make up a bogus return in a matter of a few minutes, so going to the horse's mouth, so to speak with the 4506 is what most underwriters will require.

Having said that, if the borrower has other assets and the property in question is worth far more than the amount of the loan, some lenders' underwriting rules will allow a no-income-verification loan to proceed.

If someone is foolish enough to wander off into the "no lawful tax" weeds, they're doomed in terms of getting a loan approved; they carry a huge potential liability along with them.

And they'd have to be first-time players in the TP bowleramma - any Federal tax liens (past or present) will be red flags.