Why do programs asking for your income as a qualifying agent always ask for Gross instead of Net?

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I understand we get income taxes back, but if you don’t have a dependent you get a very small part of what you paid in. Last year, I paid $7k in taxes yet only got a little over $2k back. So when I fill out application for, let’s say college financial aid, they want me to count that $5k as if it was money that I had to spend. Why is this?

In: Economics

4 Answers

Anonymous 0 Comments

Gross income is a level playing field, not affected by deductions, differences between state taxes, and other varying factors. Also, your education expenses will be tax deductible, so your gross income is a more accurate reflection.

I sure wish my tax bill was only $5k 😅😭😩

Anonymous 0 Comments

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Anonymous 0 Comments

They’re not operating under the assumption that you have that money floating around to spend. They’re using that because almost everyone knows how much they make pre-tax.

Anonymous 0 Comments

You can affect your withholding. If benefits were based on the net income you receive on payday, what would stop people from having extra withheld, receiving the benefits, and then getting a big refund?

In your case, you should change your W4 to have less withheld. You’re lending the government a lot of money only to get it back in April with zero interest.