COMPLETING A 2018-19 PFS · your 1040. An incorrect entry on the PFS can cause a miscalculation of the credit you receive for federal income taxes you pay. 1040 Section: Income Information

PAGE 1 OF 15

Use this primer to get an understanding of which few tax forms will be most helpful to you as you complete your PFS.

This primer doesn’t provide an overview of every possible tax form you might receive or need to file with IRS. Instead, it focuses on just four forms families will need to have on hand to complete the PFS accurately and correctly, as well one form that schools might ask you to submit. The forms this primer covers are:

z Form W2

z Form 1040

z Schedule C

z Form 1099-MISC

z Form 4506-T

For each of these forms, the primer will answer three questions:

1. What is the form used for?

2. What does the form look like?

3. Which lines on this form matter most for completing the PFS?

Important NoteBe sure to send all of your tax forms as required by each school you’re applying to. Do not limit what you submit to schools to the few documents covered in this primer. If a school requires your tax forms and schedules, be sure to send or upload the full set of tax forms that you submit to the IRS when filing your tax return. Doing so ensures that you complete the schools’ document requirements correctly, avoiding possible delays in the process.

TAX PRIMERFOR PARENTSCOMPLETING A 2018-19 PFS

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Form W2 What Is It For?The W-2 is an annual statement of your earnings for the calendar year, provided by your employer. It also displays how much was withheld from your pay for taxes, Social Security, and Medicare. This is where you can also see how much of your income was put into certain types of pre-tax retirement plans.

What Does the Form W2 Look Like?

Which Lines Matter for the PFS?Report the salary in Box 1 of your W2 on line 7A of the PFS for the parent listed as “Parent A.” Use 7B for the parent listed as “Parent B.”

Look at Box 12. If any amounts appear in this section with a code D-H, be sure to report that amount as “Payments to tax-deferred retirement plans” in PFS line 8D of the Nontaxable Income Worksheet.You do not have to report any other information from the W2 on the PFS.

It is possible that one or more schools you’re applying to might ask you to supply other information from the W2.

You’ll most likely be required to submit or upload a copy of each W2 you receive as part of your financial aid application.

TAX PRIMER FOR PARENTSCOMPLETING A 2018-19 PFS

22222a Employee’s social security number

OMB No. 1545-0008

b Employer identification number (EIN)

c Employer’s name, address, and ZIP code

d Control number

e Employee’s first name and initial Last name Suff.

f Employee’s address and ZIP code

1 Wages, tips, other compensation 2 Federal income tax withheld

3 Social security wages 4 Social security tax withheld

5 Medicare wages and tips 6 Medicare tax withheld

7 Social security tips 8 Allocated tips

9 Verification code 10 Dependent care benefits

11 Nonqualified plans 12a Co d e

12bCo d e

12cCo d e

12dCo d e

13 Statutory employee

Retirement plan

Third-party sick pay

14 Other

15 State Employer’s state ID number 16 State wages, tips, etc. 17 State income tax 18 Local wages, tips, etc. 19 Local income tax 20 Locality name

Form W-2 Wage and Tax Statement 2017

Department of the Treasury—Internal Revenue Service

Copy 1—For State, City, or Local Tax Department

Report this on PFS Line 7A or 7B

Report this on PFS Line 8D, if a code D, E, F, G, or H appears

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Form 1040What Is It For?The 1040 is used to report your sources of incomes, as well as any adjustments, deductions, and credits against your income that will determine how much and what types of federal taxes you should have paid for the tax year. If you’ve paid too much in taxes, it will show how much of a refund from the federal government you are entitled to receive. If you’ve paid too little in taxes, it will show how much more you need to pay.

Related forms are:

z 1040A (used by taxpayers with $100,000 of income of less who don’t own businesses and don’t claim itemized deductions)

z 1040EZ (used by filers with no dependents and no itemized deductions, and with income under $100,000 all of which was earned as wages, salaries, and tips)

What Does the Form 1040 Look Like?The 1040 is a two-page document comprised of several sections. Let’s look at the form in sections:

1040 Section: Household Information

Form 1040 Department of the Treasury—Internal Revenue Service (99)

U.S. Individual Income Tax Return 2016 OMB No. 1545-0074 IRS Use Only—Do not write or staple in this space.

For the year Jan. 1–Dec. 31, 2016, or other tax year beginning , 2016, ending , 20 See separate instructions.Your first name and initial Last name Your social security number

If a joint return, spouse’s first name and initial Last name Spouse’s social security number

▲ Make sure the SSN(s) above and on line 6c are correct.

Home address (number and street). If you have a P.O. box, see instructions. Apt. no.

City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions).

Foreign country name Foreign province/state/county Foreign postal code

Presidential Election Campaign

Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse

Filing Status

Check only one box.

1 Single

2 Married filing jointly (even if only one had income)

3 Married filing separately. Enter spouse’s SSN above and full name here. ▶

4 Head of household (with qualifying person). (See instructions.) If

the qualifying person is a child but not your dependent, enter this

child’s name here. ▶

5 Qualifying widow(er) with dependent child

Exemptions 6a Yourself. If someone can claim you as a dependent, do not check box 6a . . . . .

b Spouse . . . . . . . . . . . . . . . . . . . . . . . .}

c Dependents: (1) First name Last name

(2) Dependent’s social security number

(3) Dependent’s relationship to you

(4) ✓ if child under age 17 qualifying for child tax credit

(see instructions)

If more than four dependents, see instructions and check here ▶

d Total number of exemptions claimed . . . . . . . . . . . . . . . . .

Boxes checked on 6a and 6bNo. of children on 6c who: • lived with you • did not live with you due to divorce or separation (see instructions)

Dependents on 6c not entered above

Add numbers on lines above ▶

Income

Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld.

If you did not get a W-2, see instructions.

7 Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . 7

8a Taxable interest. Attach Schedule B if required . . . . . . . . . . . . 8a

b Tax-exempt interest. Do not include on line 8a . . . 8b

9 a Ordinary dividends. Attach Schedule B if required . . . . . . . . . . . 9a

b Qualified dividends . . . . . . . . . . . 9b

10 Taxable refunds, credits, or offsets of state and local income taxes . . . . . . 10

11 Alimony received . . . . . . . . . . . . . . . . . . . . . 11

12 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . . 12

13 Capital gain or (loss). Attach Schedule D if required. If not required, check here ▶ 13

14 Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . 14

15 a IRA distributions . 15a b Taxable amount . . . 15b

16 a Pensions and annuities 16a b Taxable amount . . . 16b

17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17

18 Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . 18

19 Unemployment compensation . . . . . . . . . . . . . . . . . 19

20 a Social security benefits 20a b Taxable amount . . . 20b

21 Other income. List type and amount 21 22 Combine the amounts in the far right column for lines 7 through 21. This is your total income ▶ 22

Adjusted Gross Income

23 Educator expenses . . . . . . . . . . . 23

24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ 24

25 Health savings account deduction. Attach Form 8889 . 25

26 Moving expenses. Attach Form 3903 . . . . . . 26

27 Deductible part of self-employment tax. Attach Schedule SE . 27

28 Self-employed SEP, SIMPLE, and qualified plans . . 28

29 Self-employed health insurance deduction . . . . 29

30 Penalty on early withdrawal of savings . . . . . . 30

31 a Alimony paid b Recipient’s SSN ▶ 31a

32 IRA deduction . . . . . . . . . . . . . 32

33 Student loan interest deduction . . . . . . . . 33

34 Tuition and fees. Attach Form 8917 . . . . . . . 34

35 Domestic production activities deduction. Attach Form 8903 35

36 Add lines 23 through 35 . . . . . . . . . . . . . . . . . . . 36 37 Subtract line 36 from line 22. This is your adjusted gross income . . . . . ▶ 37

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2016)

Report this onPFS Line 6B

Report this onPFS Lines 2, 3

Report this onPFS Line 6C


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Which Lines Matter for the PFS?As you can see, each line of the 1040’s Income section has a corresponding line on the PFS where the income information should be reported. Most are straightforward one-to-one matches. However, a few lines warrant a little more guidance:

1040 Line 7: Salary/WagesThe salary and wages reported here are a total of salaries earned by the parents in the household. The PFS asks you to report each parent’s salary separately, so you won’t see a single line item on the PFS for the total salaries. Be sure though, that the total of the salaries you enter in line 7A and 7B for each parent is the same as the total shown on Line 7 of your 1040.

TAX PRIMER FOR PARENTSCOMPLETING A 2018-19 PFSWhich Lines Matter for the PFS?Be sure your tax filing status on PFS Line 6B matches what is checked off on boxes 1-5 on your 1040. An incorrect choice on the PFS can cause a miscalculation of the credit you receive for federal income taxes you pay.

When listing your dependents on the PFS, make sure it is consistent with those listed on your 1040 in Line 6C. If you support children or others in your household that you cannot claim as a dependent, be sure to list them and explain their relationship to you in the PFS “Other Considerations” section.

PFS Line 6C asks about exemptions you claim. Be sure it matches with exemptions claimed on Line 6D of your 1040. An incorrect entry on the PFS can cause a miscalculation of the credit you receive for federal income taxes you pay.

1040 Section: Income Information

Form 1040 Department of the Treasury—Internal Revenue Service (99)










Filing Status

Check only one box.

1 Single








b Spouse . . . . . . . . . . . . . . . . . . . . . . . .}





(see instructions)






Income






























32 IRA deduction . . . . . . . . . . . . . 32






PFS Line 7T

PFS Line 7EPFS Line 19PFS Line 7MPFS Line 7TPFS Line 7OPFS Line 7P

PFS Line 7Q or 19

PFS Line 19PFS Line 7RPFS Line 7SPFS Line 7T

PFS Line 8K

Do not report on PFS

PFS Line 7A, 7B

PFS Line 7C

PFS Line 7D

PFS Line 8M = 15a minus 15b

PFS Line 8M = 16a minus 16b

PFS Line 8B = 20a minus 20b

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1040 Line 12: Business income or (loss)This refers specifically to income or loss you had from a Sole Proprietorship, for which you also completed a Schedule C. On Line 19 of the PFS, the total of the net profit or loss from each Schedule C business you own should equal the amount shown on your 1040 Line 12. Be sure to send or upload each Schedule C you file, if you have income or a loss listed on your 1040 Line 12.

1040 Lines 15a, 16a, and 20a: Distributions from IRA, Pensions, and Social Security1040 Lines 15a, 16a, and 20a each show the total income you received from IRA, Pensions, and Social Security. Lines 15b, 16b, and 20b show the portion of that total that was taxable. Each has a specific PFS line for reporting the taxable portion.

To report the nontaxable portion correctly, take the difference and report it in the appropriate PFS line item in the Nontaxable Income section.

Report your nontaxable IRA and Pension income in PFS Line 8M.

Report your nontaxable Social Security benefits in PFS Line 8B.

1040 Line 17: Rental Real Estate, royalties, partnerships, S corporations, trusts, etc.This line can be complicated, depending on what type of income is included here, since many different types of income reportable on your 1040 Line 17.

If any income reported on Line 17 is from rental property, trusts, or royalties, report it on Line 7Q of your PFS.

If any income reported on Line 17 is from S corporations or Partnerships that you share ownership in, report it on Line 19 of your PFS, in the section that asks you to detail the income and expenses of the business.

Be sure to send or upload each Schedule E you file, if you have income or loss listed on your 1040 Line 17.


PAGE 6 OF 15

1040 Section: Adjustments to Income

Which Lines Matter for the PFS?In this section, four items have one-to-one matching items on the PFS. Be sure to report the total shown on 1040 Line 36 on PFS line 7F. If you have adjustments in 1040 Lines 27, 28, or 32, report them in the proper lines on the PFS. If you have adjustments other than those three, be sure to leave a note in PFS Item 7J to specify what the adjustments were for (e.g., “alimony paid” or “Educator expenses”).

1040 Section: Tax and Credits

TAX PRIMER FOR PARENTSFo

rm 1040 Department of the Treasury—Internal Revenue Service (99)










Filing Status

Check only one box.

1 Single








b Spouse . . . . . . . . . . . . . . . . . . . . . . . .}





(see instructions)






Income






























32 IRA deduction . . . . . . . . . . . . . 32






PFS Line 7F

PFS Line 7IPFS Line 7H

PFS Line 7G

Form 1040 (2016) Page 2

Tax and Credits

38 Amount from line 37 (adjusted gross income) . . . . . . . . . . . . . . 38

39a Check if:

{ You were born before January 2, 1952, Blind.

Spouse was born before January 2, 1952, Blind.} Total boxes

checked ▶ 39a

b If your spouse itemizes on a separate return or you were a dual-status alien, check here ▶ 39b

Standard Deduction for— • People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. • All others: Single or Married filing separately, $6,300 Married filing jointly or Qualifying widow(er), $12,600 Head of household, $9,300

40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) . . 40

41 Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . . . 41

42 Exemptions. If line 38 is $155,650 or less, multiply $4,050 by the number on line 6d. Otherwise, see instructions 42

43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . 43

44 Tax (see instructions). Check if any from: a Form(s) 8814 b Form 4972 c 44

45 Alternative minimum tax (see instructions). Attach Form 6251 . . . . . . . . . 45

46 Excess advance premium tax credit repayment. Attach Form 8962 . . . . . . . . 46

47 Add lines 44, 45, and 46 . . . . . . . . . . . . . . . . . . . ▶ 47

48 Foreign tax credit. Attach Form 1116 if required . . . . 48

49 Credit for child and dependent care expenses. Attach Form 2441 49

50 Education credits from Form 8863, line 19 . . . . . 50

51 Retirement savings contributions credit. Attach Form 8880 51

52 Child tax credit. Attach Schedule 8812, if required . . . 52

53 Residential energy credits. Attach Form 5695 . . . . 53

54 Other credits from Form: a 3800 b 8801 c 54

55 Add lines 48 through 54. These are your total credits . . . . . . . . . . . . 55

56 Subtract line 55 from line 47. If line 55 is more than line 47, enter -0- . . . . . . ▶ 56

Other Taxes

57 Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . 57

58 Unreported social security and Medicare tax from Form: a 4137 b 8919 . . 58

59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required . . 59

60 a Household employment taxes from Schedule H . . . . . . . . . . . . . . 60a

b First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . . 60b

61 Health care: individual responsibility (see instructions) Full-year coverage . . . . . 61

62 Taxes from: a Form 8959 b Form 8960 c Instructions; enter code(s) 62

63 Add lines 56 through 62. This is your total tax . . . . . . . . . . . . . ▶ 63

Payments 64 Federal income tax withheld from Forms W-2 and 1099 . . 64

65 2016 estimated tax payments and amount applied from 2015 return 65If you have a qualifying child, attach Schedule EIC.

66a Earned income credit (EIC) . . . . . . . . . . 66a

b Nontaxable combat pay election 66b

67 Additional child tax credit. Attach Schedule 8812 . . . . . 67

68 American opportunity credit from Form 8863, line 8 . . . 68

69 Net premium tax credit. Attach Form 8962 . . . . . . 69

70 Amount paid with request for extension to file . . . . . 70

71 Excess social security and tier 1 RRTA tax withheld . . . . 7172 Credit for federal tax on fuels. Attach Form 4136 . . . . 72

73 Credits from Form: a 2439 b Reserved c 8885 d 73

74 Add lines 64, 65, 66a, and 67 through 73. These are your total payments . . . . . ▶ 74

Refund

Direct deposit? See instructions.

75 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 75

76a Amount of line 75 you want refunded to you. If Form 8888 is attached, check here . ▶ 76a▶

▶

b Routing number ▶ c Type: Checking Savings

d Account number

77 Amount of line 75 you want applied to your 2017 estimated tax ▶ 77Amount You Owe

78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions ▶ 7879 Estimated tax penalty (see instructions) . . . . . . . 79

Third Party Designee

Do you want to allow another person to discuss this return with the IRS (see instructions)? Yes. Complete below. NoDesignee’s name ▶

Phone no. ▶

Personal identification number (PIN) ▶

Sign Here Joint return? See instructions. Keep a copy for your records.

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Your signature Date Your occupation Daytime phone number

Spouse’s signature. If a joint return, both must sign. Date

▲

Spouse’s occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.)

Paid Preparer Use Only

Print/Type preparer’s name Preparer’s signature Date Check if self-employed

PTIN

Firm’s name ▶

Firm’s address ▶

Firm’s EIN ▶

Phone no.

www.irs.gov/form1040 Form 1040 (2016)

PFS Line 6E

COMPLETING A 2018-19 PFS

PAGE 7 OF 15

Which Lines Matter for the PFS?While there are many items in this section of the 1040, only one line is relevant when completing your PFS. The amount on Line 40, your itemized deductions, should be reported on PFS Line 6E. If you did not itemize your deductions, you can enter zero on the PFS for this question. No other questions on the PFS ask about any amounts in this section of the 1040.

If your itemized deductions include medical and/or dental expenses, look at your Schedule A, Line 1. You can report the total medical and dental expenses shown there in PFS Line 14A.

Please note that you can still report your medical and dental expenses on PFS Line 14A even if you did not itemize them on a Schedule A (see example below):

1040 Section: Other Taxes and Payments

TAX PRIMER FOR PARENTS

SCHEDULE A (Form 1040)

Department of the Treasury Internal Revenue Service (99)

Itemized Deductions▶ Information about Schedule A and its separate instructions is at www.irs.gov/schedulea.

▶ Attach to Form 1040.

OMB No. 1545-0074

2016Attachment Sequence No. 07

Name(s) shown on Form 1040 Your social security number

Medical and Dental Expenses

Caution: Do not include expenses reimbursed or paid by others. 1 Medical and dental expenses (see instructions) . . . . . 1 2 Enter amount from Form 1040, line 38 2 3 Multiply line 2 by 10% (0.10). But if either you or your spouse was

born before January 2, 1952, multiply line 2 by 7.5% (0.075) instead 3 4 Subtract line 3 from line 1. If line 3 is more than line 1, enter -0- . . . . . . . . 4

Taxes You Paid

5 State and local (check only one box):a Income taxes, orb General sales taxes } . . . . . . . . . . . 5

6 Real estate taxes (see instructions) . . . . . . . . . 6 7 Personal property taxes . . . . . . . . . . . . . 7 8 Other taxes. List type and amount ▶

8 9 Add lines 5 through 8 . . . . . . . . . . . . . . . . . . . . . . 9

Interest You Paid

Note: Your mortgage interest deduction may be limited (see instructions).

10 Home mortgage interest and points reported to you on Form 1098 10 11

Home mortgage interest not reported to you on Form 1098. If paid to the person from whom you bought the home, see instructions and show that person’s name, identifying no., and address ▶

11 12

Points not reported to you on Form 1098. See instructions for special rules . . . . . . . . . . . . . . . . . 12

13 Mortgage insurance premiums (see instructions) . . . . . 13 14 Investment interest. Attach Form 4952 if required. (See instructions.) 14 15 Add lines 10 through 14 . . . . . . . . . . . . . . . . . . . . . 15

Gifts to CharityIf you made a gift and got a benefit for it, see instructions.

16

Gifts by cash or check. If you made any gift of $250 or more, see instructions . . . . . . . . . . . . . . . . 16

17

Other than by cash or check. If any gift of $250 or more, see instructions. You must attach Form 8283 if over $500 . . . 17

18 Carryover from prior year . . . . . . . . . . . . 1819 Add lines 16 through 18 . . . . . . . . . . . . . . . . . . . . . 19

Casualty and Theft Losses 20 Casualty or theft loss(es). Attach Form 4684. (See instructions.) . . . . . . . . 20 Job Expenses and Certain Miscellaneous Deductions

21

Unreimbursed employee expenses—job travel, union dues, job education, etc. Attach Form 2106 or 2106-EZ if required. (See instructions.) ▶ 21

22 Tax preparation fees . . . . . . . . . . . . . 22 23

Other expenses—investment, safe deposit box, etc. List type and amount ▶

23 24 Add lines 21 through 23 . . . . . . . . . . . . 24 25 Enter amount from Form 1040, line 38 25 26 Multiply line 25 by 2% (0.02) . . . . . . . . . . 26 27 Subtract line 26 from line 24. If line 26 is more than line 24, enter -0- . . . . . . 27

Other Miscellaneous Deductions

28 Other—from list in instructions. List type and amount ▶

28 Total Itemized Deductions

29

Is Form 1040, line 38, over $155,650?

29 No. Your deduction is not limited. Add the amounts in the far right column for lines 4 through 28. Also, enter this amount on Form 1040, line 40. } . .Yes. Your deduction may be limited. See the Itemized Deductions Worksheet in the instructions to figure the amount to enter.

30

If you elect to itemize deductions even though they are less than your standard deduction, check here . . . . . . . . . . . . . . . . . . . ▶

For Paperwork Reduction Act Notice, see Form 1040 instructions. Cat. No. 17145C Schedule A (Form 1040) 2016

PFS Line 14A

Form 1040 (2016) Page 2

Tax and Credits

38 Amount from line 37 (adjusted gross income) . . . . . . . . . . . . . . 38

39a Check if:

{ You were born before January 2, 1952, Blind.

Spouse was born before January 2, 1952, Blind.} Total boxes

checked ▶ 39a

b If your spouse itemizes on a separate return or you were a dual-status alien, check here ▶ 39b

Standard Deduction for— • People who check any box on line 39a or 39b or who can be claimed as a dependent, see instructions. • All others: Single or Married filing separately, $6,300 Married filing jointly or Qualifying widow(er), $12,600 Head of household, $9,300

40 Itemized deductions (from Schedule A) or your standard deduction (see left margin) . . 40

41 Subtract line 40 from line 38 . . . . . . . . . . . . . . . . . . . 41

42 Exemptions. If line 38 is $155,650 or less, multiply $4,050 by the number on line 6d. Otherwise, see instructions 42

43 Taxable income. Subtract line 42 from line 41. If line 42 is more than line 41, enter -0- . . 43

44 Tax (see instructions). Check if any from: a Form(s) 8814 b Form 4972 c 44

45 Alternative minimum tax (see instructions). Attach Form 6251 . . . . . . . . . 45

46 Excess advance premium tax credit repayment. Attach Form 8962 . . . . . . . . 46

47 Add lines 44, 45, and 46 . . . . . . . . . . . . . . . . . . . ▶ 47

48 Foreign tax credit. Attach Form 1116 if required . . . . 48

49 Credit for child and dependent care expenses. Attach Form 2441 49

50 Education credits from Form 8863, line 19 . . . . . 50

51 Retirement savings contributions credit. Attach Form 8880 51

52 Child tax credit. Attach Schedule 8812, if required . . . 52

53 Residential energy credits. Attach Form 5695 . . . . 53

54 Other credits from Form: a 3800 b 8801 c 54

55 Add lines 48 through 54. These are your total credits . . . . . . . . . . . . 55

56 Subtract line 55 from line 47. If line 55 is more than line 47, enter -0- . . . . . . ▶ 56

Other Taxes

57 Self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . 57

58 Unreported social security and Medicare tax from Form: a 4137 b 8919 . . 58

59 Additional tax on IRAs, other qualified retirement plans, etc. Attach Form 5329 if required . . 59

60 a Household employment taxes from Schedule H . . . . . . . . . . . . . . 60a

b First-time homebuyer credit repayment. Attach Form 5405 if required . . . . . . . . 60b

61 Health care: individual responsibility (see instructions) Full-year coverage . . . . . 61

62 Taxes from: a Form 8959 b Form 8960 c Instructions; enter code(s) 62

63 Add lines 56 through 62. This is your total tax . . . . . . . . . . . . . ▶ 63

Payments 64 Federal income tax withheld from Forms W-2 and 1099 . . 64

65 2016 estimated tax payments and amount applied from 2015 return 65If you have a qualifying child, attach Schedule EIC.

66a Earned income credit (EIC) . . . . . . . . . . 66a

b Nontaxable combat pay election 66b

67 Additional child tax credit. Attach Schedule 8812 . . . . . 67

68 American opportunity credit from Form 8863, line 8 . . . 68

69 Net premium tax credit. Attach Form 8962 . . . . . . 69

70 Amount paid with request for extension to file . . . . . 70

71 Excess social security and tier 1 RRTA tax withheld . . . . 7172 Credit for federal tax on fuels. Attach Form 4136 . . . . 72

73 Credits from Form: a 2439 b Reserved c 8885 d 73

74 Add lines 64, 65, 66a, and 67 through 73. These are your total payments . . . . . ▶ 74

Refund

Direct deposit? See instructions.

75 If line 74 is more than line 63, subtract line 63 from line 74. This is the amount you overpaid 75

76a Amount of line 75 you want refunded to you. If Form 8888 is attached, check here . ▶ 76a▶

▶

b Routing number ▶ c Type: Checking Savings

d Account number

77 Amount of line 75 you want applied to your 2017 estimated tax ▶ 77Amount You Owe

78 Amount you owe. Subtract line 74 from line 63. For details on how to pay, see instructions ▶ 7879 Estimated tax penalty (see instructions) . . . . . . . 79

Third Party Designee

Do you want to allow another person to discuss this return with the IRS (see instructions)? Yes. Complete below. NoDesignee’s name ▶

Phone no. ▶

Personal identification number (PIN) ▶

Sign Here Joint return? See instructions. Keep a copy for your records.

Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and accurately list all amounts and sources of income I received during the tax year. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Your signature Date Your occupation Daytime phone number

Spouse’s signature. If a joint return, both must sign. Date

▲

Spouse’s occupation If the IRS sent you an Identity Protection PIN, enter it here (see inst.)

Paid Preparer Use Only

Print/Type preparer’s name Preparer’s signature Date Check if self-employed

PTIN

Firm’s name ▶

Firm’s address ▶

Firm’s EIN ▶

Phone no.

www.irs.gov/form1040 Form 1040 (2016)

PFS Line 17J

PFS Line 8IOn PFS Line 6F,

report the difference of 1040 Line 63 minus Line 57


PAGE 8 OF 15

Which Lines Matter for the PFS?1040 Line 57 shows the total amount of self-employment taxes you paid for your business(es). These should also be report on Line 17J on the PFS. Note that the PFS will ask you how much self-employment tax you paid for each business separately. The total of all of those self-employment tax amounts should be equal to what’s reported here on the 1040 Line 57.

1040 Line 63 shows what you owe for the different types of federal taxes on your income. PFS Line 6F asks you to report your federal taxes paid. Be sure to report the amount shown on 1040 Line 63. But if you also have Self-Employment taxes, do not include those in PFS Line 6F, since you have to report those separately for each business. Instead, for PFS Line 6F, report the total tax on Line 63 MINUS any Self-Employment tax on Line 57.

Earned income credits shown on 1040 Line 66a are considered non-taxable income and should be reported on PFS Line 8I.

1040 Section: Refund, Amount You Owe, Third Party Designee, SignaturesThere is no information provided in these final areas of the 1040 that is also asked for on the PFS.


PAGE 9 OF 15

Schedule CWhat Is The Schedule C For?The Schedule C is used for reporting specific details about each business you own for which you are the sole proprietor. It shows the name, location, and type of business. It details the total, gross income you received for the business. It itemizes the allowable expenses of the business that can be written off against the business’s income to ultimately show what your net profit or loss was on the business. The net profit or loss is then entered on your Form 1040 on Line 12. When you submit your 1040 to the IRS, you are required to attach/include a Schedule C for each sole proprietorship you own.

What Does the Schedule C Look Like?


SCHEDULE C (Form 1040)


Profit or Loss From Business (Sole Proprietorship)

▶ Information about Schedule C and its separate instructions is at www.irs.gov/schedulec.▶ Attach to Form 1040, 1040NR, or 1041; partnerships generally must file Form 1065.

OMB No. 1545-0074


Name of proprietor Social security number (SSN)

A Principal business or profession, including product or service (see instructions) B Enter code from instructions

▶

C Business name. If no separate business name, leave blank. D Employer ID number (EIN), (see instr.)

E Business address (including suite or room no.) ▶

City, town or post office, state, and ZIP code

F Accounting method: (1) Cash (2) Accrual (3) Other (specify) ▶

G Did you “materially participate” in the operation of this business during 2016? If “No,” see instructions for limit on losses . Yes No

H If you started or acquired this business during 2016, check here . . . . . . . . . . . . . . . . . ▶

I Did you make any payments in 2016 that would require you to file Form(s) 1099? (see instructions) . . . . . . . . Yes No

J If "Yes," did you or will you file required Forms 1099? . . . . . . . . . . . . . . . . . . . . . Yes No

Part I Income 1 Gross receipts or sales. See instructions for line 1 and check the box if this income was reported to you on

Form W-2 and the “Statutory employee” box on that form was checked . . . . . . . . . ▶ 1

2 Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . 2

3 Subtract line 2 from line 1 . . . . . . . . . . . . . . . . . . . . . . . . 3

4 Cost of goods sold (from line 42) . . . . . . . . . . . . . . . . . . . . . . 4

5 Gross profit. Subtract line 4 from line 3 . . . . . . . . . . . . . . . . . . . . 5

6 Other income, including federal and state gasoline or fuel tax credit or refund (see instructions) . . . . 6

7 Gross income. Add lines 5 and 6 . . . . . . . . . . . . . . . . . . . . . ▶ 7 Part II Expenses. Enter expenses for business use of your home only on line 30.

8 Advertising . . . . . 8

9

Car and truck expenses (see instructions) . . . . . 9

10 Commissions and fees . 10

11 Contract labor (see instructions) 11

12 Depletion . . . . . 12 13

Depreciation and section 179 expense deduction (not included in Part III) (see instructions) . . . . . 13

14

Employee benefit programs (other than on line 19) . . 14

15 Insurance (other than health) 15

16 Interest:

a Mortgage (paid to banks, etc.) 16a

b Other . . . . . . 16b17 Legal and professional services 17

18 Office expense (see instructions) 18

19 Pension and profit-sharing plans . 19

20 Rent or lease (see instructions):

a Vehicles, machinery, and equipment 20a

b Other business property . . . 20b

21 Repairs and maintenance . . . 21

22 Supplies (not included in Part III) . 22

23 Taxes and licenses . . . . . 23

24 Travel, meals, and entertainment:

a Travel . . . . . . . . . 24a

b

Deductible meals and entertainment (see instructions) . 24b

25 Utilities . . . . . . . . 25

26 Wages (less employment credits) . 26

27 a Other expenses (from line 48) . . 27a

b Reserved for future use . . . 27b

28 Total expenses before expenses for business use of home. Add lines 8 through 27a . . . . . . ▶ 28

29 Tentative profit or (loss). Subtract line 28 from line 7 . . . . . . . . . . . . . . . . . 29

30 Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method (see instructions). Simplified method filers only: enter the total square footage of: (a) your home:

and (b) the part of your home used for business: . Use the Simplified

Method Worksheet in the instructions to figure the amount to enter on line 30 . . . . . . . . . 30

31 Net profit or (loss). Subtract line 30 from line 29.

• If a profit, enter on both Form 1040, line 12 (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see instructions). Estates and trusts, enter on Form 1041, line 3.

• If a loss, you must go to line 32.} 31

32 If you have a loss, check the box that describes your investment in this activity (see instructions).

• If you checked 32a, enter the loss on both Form 1040, line 12, (or Form 1040NR, line 13) and on Schedule SE, line 2. (If you checked the box on line 1, see the line 31 instructions). Estates and trusts, enter on Form 1041, line 3. • If you checked 32b, you must attach Form 6198. Your loss may be limited.

} 32a All investment is at risk.

32b Some investment is not at risk.

For Paperwork Reduction Act Notice, see the separate instructions. Cat. No. 11334P Schedule C (Form 1040) 2016


PAGE 10 OF 15

Which Lines Matter for the PFS?If you have a Schedule C, you have a Sole Proprietorship. On PFS Line 6G, answer “Yes.” You will be required to complete Section 15 for Business/Farm information.

On PFS Line 15C, select “Sole Proprietorship” and complete the questions about each business based on the income and expense information provided on the Schedule C. See below for guidance:

Schedule C: Business Information and Income

Note that you will have to complete a separate section on income for each sole proprietorship that you own.






OMB No. 1545-0074




▶


















9




12 Depletion . . . . . 12 13


14



16 Interest:












a Travel . . . . . . . . . 24a

b


25 Utilities . . . . . . . . 25

















PFS Line 16A

PFS Line 16BPFS Line 16CPFS Line 16D

PFS Line 15K

PFS Line 15APFS Line 15G - 15J


PAGE 11 OF 15

Schedule C: Business Expenses and Net Profit/Loss

Look at Line 13. If you are writing off any depreciation or “section 179 expense,” you will see an entry here. PFS Line 17F asks you to report this amount. If you claim depreciation, you will likely also file a Form 4562. If you have a 4562, be sure to send or upload that with your tax forms. Doing so allows the school to clarify how much of the amount on Line 13 is actually depreciation and not “section 179 expense.” This is to your advantage, typically.

Look at Line 26. If you paid wages to employees for your business (as reported on W2’s that you filed for them), the PFS will ask you to separate out any wages you paid for yourself or your spouse from wages you paid to others.

If Schedule C Line 26 includes wages for yourself and/or your spouse, report the amount you paid to yourself and/or your spouse on PFS Line 17A. Only report this amount if you provided a W2 as documentation of those earnings. Do NOT report your net profit as your salary.

If Schedule C Line 26 includes wages paid for anyone other than yourself or your spouse, report the amount that went to other employees on PFS Line 17B.






OMB No. 1545-0074




▶


















9




12 Depletion . . . . . 12 13


14



16 Interest:












a Travel . . . . . . . . . 24a

b


25 Utilities . . . . . . . . 25

















PFS Line 17F

PFS Line 17C

PFS Line 17D

PFS Line 17A, B

PFS Line 17I

PFS Line 17L


PAGE 12 OF 15

By definition, a sole proprietorship doesn’t share the profit or loss of the business with any other person or entity. Report the amount on Schedule C Line 31 on PFS Line 17L to reflect your share of the total business profit or loss (in other words, the amount that belongs to you).

Note that you will have to complete a separate section on expenses and net profit for each sole proprietorship that you own.


PAGE 13 OF 15

Form 1099-MISCWhat Is Form 1099-MISC For?The Form 1099-MISC is provided to you by a person or firm for whom you performed work or service by hiring yourself out as a freelancer, contractor, or the like. 1099s can also show other types of income such as royalties, commissions or rents. Basically, it shows income you earned that wasn’t provided to you as someone else’s employee or from your investments.

Other types of 1099s you might receive:

z 1099-DIV (which reports income from dividends, distributions, and capital gains from investments accounts such as stocks, bonds, and mutual funds)

z 1099-INT (which tracks interest income you earned from investments such as savings accounts).

What Does the Form 1099-MISC Look Like?


Form 1099-MISC

2017 Miscellaneous Income

Copy 1For State Tax

Department

Department of the Treasury - Internal Revenue Service

OMB No. 1545-0115

VOID CORRECTEDPAYER’S name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no.

PAYER’S federal identification number RECIPIENT’S identification number

RECIPIENT’S name

Street address (including apt. no.)

City or town, state or province, country, and ZIP or foreign postal code

Account number (see instructions) FATCA filing requirement

1 Rents

$2 Royalties

$3 Other income

$4 Federal income tax withheld

$5 Fishing boat proceeds

$

6 Medical and health care payments

$7 Nonemployee compensation

$

8 Substitute payments in lieu of dividends or interest

$9 Payer made direct sales of

$5,000 or more of consumer products to a buyer (recipient) for resale ▶

10 Crop insurance proceeds

$11 12

13 Excess golden parachute payments

$

14 Gross proceeds paid to an attorney

$15a Section 409A deferrals

$

15b Section 409A income

$

16 State tax withheld

$$

17 State/Payer’s state no. 18 State income

$$

Form 1099-MISC www.irs.gov/form1099misc


PAGE 14 OF 15

Which Lines Matter for the PFS?Income reported on your 1099s should already be included in certain lines of your 1040. On the PFS, any income reported on a 1099-MISC (other than rents and royalties) should be reported on PFS Line 7T.

Important Notes1. Do not report any amounts reported on a 1099-MISC as salary or wages, even if you earned it by working

for someone as a contractor, freelancer, etc. When reporting your salary or wages, ONLY count income for which you received a W2.

2. Many schools will require you to submit a W2 as part of your financial aid application. If you didn’t receive a W2 (meaning you didn’t earn a salary as someone else’s employee), but you did receive a 1099-MISC as a contractor or freelancer, you need to submit your 1099-MISC in place of the W2 the school requires.


PAGE 15 OF 15

Form 4506-TWhat Is It For?The Form 4506-T is used to retrieve a transcript of information provided on a past tax return, W2, and 1099 on file with the IRS. It gives permission to a third party to receive the tax return data directly.

Related forms:

z 4506 (used to receive an actual copy of a past 1040 and schedules, not just the transcript)

z 4506-TEZ (short form request for a transcript if only requesting a past 1040, not other information from W2s or Schedules)

What Does It Look Like?

Which Lines Matter for the PFS?No questions on the PFS use information from the Form 4506T. You do not need to use this form when you’re completing the PFS. However, it is sometimes required by schools so that they can access your tax information if they want to confirm that what you supplied to them is the same as what you filed with the IRS.


Form 4506-T(Rev. September 2015)Department of the Treasury Internal Revenue Service

Request for Transcript of Tax Return▶ Do not sign this form unless all applicable lines have been completed.

▶ Request may be rejected if the form is incomplete or illegible.▶ For more information about Form 4506-T, visit www.irs.gov/form4506t.

OMB No. 1545-1872

Tip. Use Form 4506-T to order a transcript or other return information free of charge. See the product list below. You can quickly request transcripts by using our automated self-help service tools. Please visit us at IRS.gov and click on “Get a Tax Transcript...” under “Tools” or call 1-800-908-9946. If you need a copy of your return, use Form 4506, Request for Copy of Tax Return. There is a fee to get a copy of your return.

1a Name shown on tax return. If a joint return, enter the name shown first.

1b First social security number on tax return, individual taxpayer identification number, or employer identification number (see instructions)

2a If a joint return, enter spouse’s name shown on tax return. 2b Second social security number or individual taxpayer identification number if joint tax return

3 Current name, address (including apt., room, or suite no.), city, state, and ZIP code (see instructions)

4 Previous address shown on the last return filed if different from line 3 (see instructions)

5 If the transcript or tax information is to be mailed to a third party (such as a mortgage company), enter the third party’s name, address, and telephone number.

Caution: If the tax transcript is being mailed to a third party, ensure that you have filled in lines 6 through 9 before signing. Sign and date the form once you have filled in these lines. Completing these steps helps to protect your privacy. Once the IRS discloses your tax transcript to the third party listed on line 5, the IRS has no control over what the third party does with the information. If you would like to limit the third party’s authority to disclose your transcript information, you can specify this limitation in your written agreement with the third party.

6 Transcript requested. Enter the tax form number here (1040, 1065, 1120, etc.) and check the appropriate box below. Enter only one tax form number per request. ▶

a Return Transcript, which includes most of the line items of a tax return as filed with the IRS. A tax return transcript does not reflect changes made to the account after the return is processed. Transcripts are only available for the following returns: Form 1040 series, Form 1065, Form 1120, Form 1120-A, Form 1120-H, Form 1120-L, and Form 1120S. Return transcripts are available for the current year and returns processed during the prior 3 processing years. Most requests will be processed within 10 business days . . . . . .

b Account Transcript, which contains information on the financial status of the account, such as payments made on the account, penalty assessments, and adjustments made by you or the IRS after the return was filed. Return information is limited to items such as tax liability and estimated tax payments. Account transcripts are available for most returns. Most requests will be processed within 10 business days .

c Record of Account, which provides the most detailed information as it is a combination of the Return Transcript and the Account Transcript. Available for current year and 3 prior tax years. Most requests will be processed within 10 business days . . . . . .

7 Verification of Nonfiling, which is proof from the IRS that you did not file a return for the year. Current year requests are only available after June 15th. There are no availability restrictions on prior year requests. Most requests will be processed within 10 business days . .

8 Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. The IRS can provide a transcript that includes data from these information returns. State or local information is not included with the Form W-2 information. The IRS may be able to provide this transcript information for up to 10 years. Information for the current year is generally not available until the year after it is filed with the IRS. For example, W-2 information for 2011, filed in 2012, will likely not be available from the IRS until 2013. If you need W-2 information for retirement purposes, you should contact the Social Security Administration at 1-800-772-1213. Most requests will be processed within 10 business days .

Caution: If you need a copy of Form W-2 or Form 1099, you should first contact the payer. To get a copy of the Form W-2 or Form 1099 filed with your return, you must use Form 4506 and request a copy of your return, which includes all attachments.

9 Year or period requested. Enter the ending date of the year or period, using the mm/dd/yyyy format. If you are requesting more than four years or periods, you must attach another Form 4506-T. For requests relating to quarterly tax returns, such as Form 941, you must enter each quarter or tax period separately.

Caution: Do not sign this form unless all applicable lines have been completed.

Signature of taxpayer(s). I declare that I am either the taxpayer whose name is shown on line 1a or 2a, or a person authorized to obtain the tax information requested. If the request applies to a joint return, at least one spouse must sign. If signed by a corporate officer, 1 percent or more shareholder, partner, managing member, guardian, tax matters partner, executor, receiver, administrator, trustee, or party other than the taxpayer, I certify that I have the authority to execute Form 4506-T on behalf of the taxpayer. Note: For transcripts being sent to a third party, this form must be received within 120 days of the signature date.

Signatory attests that he/she has read the attestation clause and upon so reading declares that he/she has the authority to sign the Form 4506-T. See instructions.

Phone number of taxpayer on line 1a or 2a

Sign Here

▲

Signature (see instructions) Date

▲

Title (if line 1a above is a corporation, partnership, estate, or trust)

▲

Spouse’s signature Date

For Privacy Act and Paperwork Reduction Act Notice, see page 2. Cat. No. 37667N Form 4506-T (Rev. 9-2015)

/ / / / / / / /


SELF-EMPLOYED PARENTS COMPLETING A 2018-19 PFS

TAX PRIMER Use this primer to get an understanding of which few tax forms are most helpful to business or farm owners as you

complete your Parents’ Financial Statement (PFS).

This primer doesn’t provide an overview of every possible tax form you might receive or need to file with IRS.

Instead, it focuses on the forms that self-employed families may need to have on hand to complete the PFS

accurately and correctly.

The forms this primer covers are:

For each of these forms, the primer answers three questions:

Important Note

Be sure to send your tax forms as required by each school you’re applying to. Do not limit what you submit to

schools to the documents covered in this primer. If a school requires your tax forms and schedules, be sure to send

or upload the full set of tax forms that you submit to the IRS when filing your tax return. Doing so ensures that you

complete the schools’ document requirements correctly, avoiding possible delays in the process.


TAX PRIMER

Form W2

The W-2 is an annual statement of your earnings for the calendar year, provided by your employer. It also displays

how much was withheld from your pay for taxes, Social Security, and Medicare. This is where you can also see how

much of your income was put into certain types of pre-tax retirement plans.

If you pay yourself a salary from your business, that salary will appear in Box 1. Report the salary in Box 1 of your

W2 on line 7A of the PFS for the parent listed as “Parent A.” Use 7B for the parent listed as “Parent B.” Be sure to

report the totals from all W2s if either parent has more than one for the year.

If you do not receive a W2 from your business and only use the profit from your business (or your share of the

business’s profit) as your family’s source of income, report any business income you receive in line 7A or

7B of the PFS. There are other lines on the PFS for reporting non-salary income from your business(es) based on

the type of business.


TAX PRIMER

Form 1040

The 1040 is used to report your sources of income, as well as any adjustments, deductions, and credits against

your income that will determine how much and what types of federal taxes you should have paid for the tax year.

If you’ve paid too much in taxes, it will show how much of a refund from the federal government you are entitled

to receive. If you’ve paid too little in taxes, it will show how much more you need to pay. If you own a business, you

must complete the Form 1040; you cannot file the related forms 1040A or 1040EZ.

The 1040 is a two-page document comprised of several sections.


TAX PRIMER

Let’s look at the form in sections:

Nearly every line of the 1040’s Income section has a corresponding line on the PFS where the income information

should be reported. Most are straightforward one-to-one matches. However, a few lines are worth pointing out as

relevant for business owners:

Salary and wages reported here are a total of salaries earned by the parents in the household. The PFS asks

you to report each parent’s salary separately, so you won’t see a single line item on the PFS for the total

salaries. Be sure, though, that the total of the salaries you enter in line 7A and 7B for each parent is the

same as the total shown on Line 7 of your 1040. Business owners must be careful to report profit taken

from the business as salary or wages. If you own a business and paid yourself or your spouse a salary from

the business, and reported it with a W-2, only enter the amount of salary from the W-2 in Lines 7A or 7B.

This refers specifically to income or loss you had from a Sole Proprietorship, for which you also completed

a Schedule C. On Line 19 of the PFS, the total of the net profit or loss from each Schedule C business you

own should equal the amount shown on your 1040 Line 12. Be sure to send or upload each Schedule C you

file, if you have income or a loss listed on your 1040 Line 12.

This line can be complicated, depending on what type of income is included here, since many different

types of income can be reported on your 1040 Line 17.

If any income reported on Line 17 is from rental property, trusts, or royalties, report it on PFS Line 7Q our

PFS (answer “Yes” to Other Taxable Income to open the worksheet).


TAX PRIMER If any income reported on Line 17 is from S corporations or Partnerships that you share ownership in, report

it on Line 19 of your PFS, in the section that asks you to detail the income and expenses of the business.

Be sure to send or upload each Schedule E you file, if you have income or loss listed on your 1040 Line 17.

This refers specifically to income or loss you had from a farm, for which you also completed a Schedule F.

On Line 19 of the PFS, the total of the net profit or loss from each Schedule F farm you own should equal

the amount shown on your 1040 Line 18. Be sure to send or upload each Schedule F you file, if you have

income or a loss listed on your 1040 Line 18.

In this section, three items are specific to self-employed applicants: deductible portion of self-employment tax and

payments to self-employment retirement and health insurance plans. Be sure to report them on the appropriate

lines on the PFS (7H and 7I).


TAX PRIMER

This shows the total amount of self-employment taxes you paid for your business(es). These should also be

report on Line 17J on the PFS. Note that the PFS will ask you how much self-employment tax you paid for

each business separately. The total of all those self-employment tax amounts should be equal to what’s

reported here on the 1040 Line 57.

This shows what you owe for the different types of federal taxes on your income. PFS Line 6G asks you to

report your federal taxes paid. Be sure to report the amount shown on 1040 Line 63. If you also have Self-

Employment taxes reported on 1040 Line 57, do not include those in PFS Line 6G, since you will report

those separately for each business. If you paid self-employment taxes, for PFS Line 6G, report the total tax

on Line 63 any Line 57 Self-Employment tax.


TAX PRIMER

Schedule C

The Schedule C is used for reporting specific details about each business you own for which you are the sole

proprietor. It shows the name, location, and type of business. It details the total, gross income you received for the

business. It itemizes the allowable expenses of the business that can be written off against the business’s income to

ultimately show what your net profit or loss was on the business. The net profit or loss is then entered on your

Form 1040 on Line 12. When you submit your 1040 to the IRS, you are required to attach/include a Schedule C for

each sole proprietorship you own.


TAX PRIMER

If you have a Schedule C, you have a Sole Proprietorship. On PFS Line 6H, answer “Yes.” You will be required to

complete Section 15 for Business/Farm information.

On PFS Line 15C, select “Sole Proprietorship” and complete the questions about each business based on the

income and expense information provided on the Schedule C. See below for guidance:

You will have to complete a separate PFS section on income for each sole proprietorship that you own, so

be sure to have each Schedule C you file on hand.


TAX PRIMER

If you are writing off any depreciation or “section 179 expense,” you will see an entry here. PFS Line 17F

asks you to report this amount. If you claim depreciation, you will likely also file a Form 4562. If you have a

4562, be sure to send or upload that with your tax forms. Doing so allows the school to clarify how much of

the amount on Line 13 is actual depreciation and not “section 179 expense.” This is to your advantage,

typically.

If you paid wages to employees for your business (as reported on W2’s that you filed for them), the PFS

will ask you to separate out any wages you paid for yourself or your spouse from wages you paid to others.

If Schedule C Line 26 includes wages for yourself and/or your spouse, report the amount you paid to

yourself and/or your spouse on PFS Line 17A. Only report this amount if you provided a W2 as

documentation of those earnings.

If Schedule C Line 26 includes wages paid for anyone other than yourself or your spouse, report the

amount that went to other employees on PFS Line 17B.


TAX PRIMER By definition, a sole proprietorship doesn’t share the profit or loss of the business with any other person or entity.

Report the amount on Schedule C Line 31 on PFS Line 17L to reflect your share of the total business profit or loss

(in other words, the amount that belongs to you).

You will have to complete a separate section on expenses and net profit for each sole proprietorship that

you own.


TAX PRIMER

Schedule E

The Schedule E is used for reporting specific details about several types of income sources such as rental real

estate income, income from partnerships, S-Corporations, royalties, trusts, estates, and more.

For rental properties, it details the total, gross income you received for up to three real estate properties you rent

out to others. It itemizes the allowable expenses of the rental properties that can be written off against the

property’s income to ultimately show what your net profit or loss was on the property. The net profit or loss is then

entered on your Form 1040 on Line 17. If you own more than three rental properties, you must submit multiple

Schedule E’s. When you submit your 1040 to the IRS, you are required to attach/include a Schedule E for each set

of three rental properties you own.

For Partnerships and S-Corporations, it details the names and types of businesses you own or co-own as

partnerships or S-Corporations. It itemizes the income or loss for each entity that is passed through to you to claim

on your 1040. The income or loss is included in the entry on your Form 1040 on Line 17.


TAX PRIMER

If you do not own any rental properties, you will not have page 1 of Schedule E.

If you do not own a share in a Partnership or S Corporation, you will not have page 2 of Schedule E (unless

you received reportable income from an estate or trust).


TAX PRIMER

There are no specific questions on the PFS for detailing the income and expense sources for rental properties.

When completing the PFS, owners of rental real estate should include the profit or loss of the rental properties in

PFS Line 7Q (answer “Yes” to Other Taxable Income to open worksheet). This amount is found on Line 17 of the

Form 1040.

Rental property owners must also complete questions 10K–10U on the PFS.

Be sure to submit all Schedule E’s that you file with your tax return to the school.

For each Partnership or S-Corporation you own, the Schedule E will report the pass-through portion of the

business’s profit or loss that you must claim on your tax return. The PFS will ask you to report the total income and

expenses of the Partnership or Corporation to calculate the profit or loss of the entire entity. On PFS Line 17L, you

must indicate how much of that profit/loss was passed-through to you. For each business you are a partner or

shareholder in, your entry on Line 17L should match the entries on Lines 28A-28D.

The total pass-through income (or loss) across all entities appears on line 32 of the Schedule E. This is then

included in the total income (or loss) reported on the 1040, Line 17 (along with other income reported on the

Schedule E). This amount, in turn, should be reported on Line 7Q of the PFS.


TAX PRIMER

Schedule F

The Schedule F is used for reporting specific details about each farm you own for which you are the sole

proprietor. It shows the name, location, and type of farm. It details the total, gross income you received for the

farm. It itemizes allowable expenses of the farm that can be written off against the farm’s income to ultimately

show your net profit or loss on the farm. The net profit or loss is then entered on your Form 1040 on Line 18. When

you submit your 1040 to the IRS, you are required to attach/include a Schedule F for each farm property you own.


TAX PRIMER

If you have a Schedule F, you have a farm. On PFS Line 6H, answer “Yes.” You will be required to complete Section

15 for Business/Farm information.

On PFS Line 15B, select “Farm” and complete the questions about each farm based on the income and expense

information provided on the Schedule F. On PFS Line 15C, select the farm’s type…are you the sole owner? Is it part

of a partnership or a corporation?

Let’s look at each section of the Schedule F.

You will have to complete a separate section on income for each farm that you own.

There are many more lines of detail on the income section of the Schedule F than on the PFS. As such, be careful

to total the appropriate lines from the Schedule F and report them in the corresponding “catchall” lines of the PFS.

Lines 1a and 2 on the Schedule F are reported on Line 16A of the PFS.

Lines 3 through 8 on the Schedule F are reported on the PFS Line 16D.

Line 1b on Schedule F is reported on Line 16B of the PFS.

Line 9 on Schedule F should match the calculation on the PFS Line 16E.


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If you are writing off any depreciation or “section 179 expense,” you will see an entry here. PFS Line 17F

asks you to report this amount. If you claim depreciation, you will likely also file a Form 4562. If you have a

4562, be sure to send or upload that with your tax forms. Doing so allows the school to clarify how much of

the amount on Line 13 is actual depreciation and not “section 179 expense.” This is to your advantage,

typically.

If you paid wages to employees for your business (as reported on W2’s or 1099’s that you provide to

them), the PFS will ask you to separate out any wages you paid for yourself or your spouse from wages

you paid to others.

If Schedule F Line 22 includes wages for yourself and/or your spouse, report the amount you paid to

yourself and/or your spouse on PFS Line 17A.

If Schedule F Line 22 includes wages paid for anyone other than yourself or your spouse, report the

amount that went to other employees on PFS Line 17B.

The amount on Schedule F Line 34 should match the calculation on PFS Line 17L to reflect your share of the total

farm profit or loss (in other words, the amount that belongs to you).

You will have to complete a separate section on expenses and net profit for each sole proprietorship that

you own.


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Schedule K-1

The Schedule K-1 is designed to report a partner’s or shareholder’s share of the partnership or S Corporation’s

income, deductions, and credits. It indicates additional information such as the percentage ownership the individual

holds and some insight into the individual’s share of, and activity with, the entity’s liabilities and capital accounts.

Form 1065 – Partnership tax return

Form 1120S – S Corporation tax return

Schedule E


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Although they share the same “K-1” name, the K-1’s are different enough that it’s important not to get them

confused with each other.

“Schedule K-1 (Form 1065)” is issued for Partnerships, while “Schedule K-1 (Form 1120S)” is issued for S

Corporations. Be sure not to get them mixed up (e.g., claiming you own a Partnership but submitting a K-1 for an

1120S or vice versa). They are not interchangeable.

Be sure to submit all K-1s you receive for all entities you have an ownership stake in, when you send or

upload your tax returns.


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No other information found on the K-1, 1120S needs to be reported on the PFS. The relevant information on Part 3

of the K-1, 1120S gets reported as your share of the income/loss on Schedule E, which ultimately gets reported on

the 1040 and PFS Line 7Q.


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TAX PRIMER If there are different amounts shown in the three lines under Line J, report only the percentage shown in “Ending”

for the line labeled “Profit,” as highlighted above; do not report the average of the three. Just report what’s listed in

the “Profit” line in the “Ending” column.

No other information found on the K-1, 1065 needs to be reported on the PFS. The relevant information on Part 3 of

the K-1, 1065 gets reported as your share of the income/loss on Schedule E, which ultimately gets reported on the

1040 and PFS Line 7Q.


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Form 1099-MISC

The Form 1099-MISC is provided to you by a person or firm for whom you performed work or service by hiring

yourself out as a freelancer, contractor, or the like. 1099s can also show other types of income such as royalties,

commissions or rents. Basically, it shows income you earned that wasn’t provided to you as someone else’s

employee or from your investments.

Other types of 1099s you might receive:

1099-DIV (which reports income from dividends, distributions, and capital gains from investments accounts

such as stocks, bonds, and mutual funds)

1099-INT (which tracks interest income you earned from investments such as savings accounts).


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Income reported on your 1099s should already be included in certain lines of your 1040. On the PFS, any income

reported on a 1099-MISC (other than rents and royalties) should be reported on PFS Line 7T.

If you and/or your spouse received multiple 1099s, be sure to add the amounts and report the total income on PFS

line 7T.

Do not report any amounts reported on a 1099-MISC as salary or wages, even if you earned it by working

for someone as a contractor, freelancer, etc. When reporting your salary or wages on the PFS,

include income for which you received a W2.

Many schools will require you to submit a W2 as part of your financial aid application. If you didn’t receive a

W2 (meaning you didn’t earn a salary as someone else’s employee), but you did receive a 1099-MISC as a

contractor or freelancer, submit your 1099-MISC in place of the W2 the school requires.


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Form 1065

Form 1065 is the return filed by entities set up as Partnerships. It details the income, gains, losses, deductions,

credits, etc. for the entire operation. Partnerships don’t pay taxes on its income but passes any profits or losses to

its partners, who in turn include their share of the profits/losses on their individual returns.

Schedule K-1 (Form 1065)

Be prepared to submit a copy of the 1065 for each Partnership in which you are a partner, as part of your

financial aid application. Ask the partnership’s accountant or tax attorney for a copy if one is not already provided

to you.


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To complete the business information section of the PFS, Partnership partners must report the appropriate

income and expenses for the entire entity. This detail can be found on page 1 of the Form 1065 as shown below:

No information found on pages 2–4 of the Form 1065 is needed to complete the PFS. However, some information

on page 5 can be useful in reporting the Partnership’s assets and debts, as referenced below.


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While the PFS seeks to gather the current value of the business’s assets and debts at the time of the application,

that information can be difficult to come by. Completing the business assets and debts based on the most recently

filed 1065 should be a reasonable approach if more current information is not available for the business.


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Form 1120S

Form 1120S is the return filed by entities set up as S Corporations. It details the income, gains, losses, deductions,

credits, etc. for the entire operation. S Corporations don’t pay taxes on its income but pass any profits or losses to

its shareholders, who in turn include their share of the profits/losses on their individual returns.

Schedule K-1 (Form 1120S)

Be prepared to submit a copy of the 1120S for each S Corporation in which you are a shareholder, as part of

your financial aid application. Ask the corporation’s accountant or tax attorney for a copy if one is not already

provided to you.


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No information found on pages 2, 3, or 5 of the Form 1065 is needed to complete the PFS. However, some

information on Form 1120S page 4 can be useful in reporting the Partnership’s assets and debts, as referenced

below:

While the PFS seeks to gather the current value of the business’s assets and debts at the time of the application,

that information can be difficult to come by. Completing the business assets and debts based on the most recently

filed 1120S should be a reasonable approach, if more current information is not available for the business.

For financial aid assessment purposes, items on lines 22–26 above are not considered debts and should not be

reported on the PFS.

Documents

COMPLETING A 2018-19 PFS · your 1040. An incorrect entry on the PFS can cause a miscalculation of the credit you receive for federal income taxes you pay. 1040 Section: Income Information