Student loans Banned from the Garden!--very long

Meredith wrote:
Work study money is also counted as tax-free income; I got a complete
refund when I included a note saying that all my income that year was
work-study.

Not exactly. A student who has no income other than work-study usually
does not make enough to meet the minimum required to pay income tax and
is entitled to a full refund of any withholdings. Otherwise, work-study
income is included on the tax form as ordinary wages (taxable
scholarships and fellowships go on the same line). Students usually
don't have to worry about income tax on work-study income until they
graduate. Example: A student works January-May in a work-study job,
graduates in May, and immediately starts a full-time job which gives him
a reasonable income. His work-study for that calendar year will be
subject to income tax since his total income for the year is high enough
to exceed filing requirements. He does, however, get a different tax
break...

If the student is employed by his school and is enrolled for the entire
work period, those wages are not subject to Social Security withholding.
The definitions on this case are a bit vague but it is clear that the
person must be primarily a student. A campus employee who takes a class
on the side still has to pay into SS (unless their state has its own
retirement fund which exempts them from SS but that is another issue).

The real bonus is work-study funds from this academic year do not have
to be counted as income/resources when the student applies for next
year's financial aid since they are strictly need-based aid. This
applies to both undergrads and grad students. If your earnings from a
campus job exceed the amount of your work-study award (which means the
hiring department paid your full wages from their budget for the excess
hours), that excess amount is counted as income on your next FAFSA.
This rarely happens to undergrads but occasionally occurs with graduate
research or teaching positions.

--
Brenda Lewis
WIP: J. Himsworth "I Shall Not Want" xs
J & P Coats "Dancing Snoopy" latchhook