Reader questions: Help filling out the FAFSA college financial aid form

I was interested to read your column about FAFSA.  I went back in and corrected my husband's earnings - thank you! I have to admit that it seems counterintuitive - wouldn't you want to show less income rather than more?  

A couple of other questions I had:

My teen heard that it's better to turn in your FAFSA early in January, that you're more likely to get money from your college. Is that true?

My second question involves Question #88: Parents' Total of Cash, Savings, and Checking Accounts.  Due to the nature of my work, I only get paid in large lump sums two or three times a year.  So if I filed right after getting one of these checks, I'd have a large balance.  But I need that money to live on for months.  

The rule of thumb is to apply ASAP, while there is more money on the table. If you have not completed your returns, you should be using estimates.

Since assets are reported as a snapshot, it is obvious that one should pick a date when the account balances are at their lowest. Unfortunately, you will have to report the lump sum if you have it on the day you submit your application, even if you did not have the money a few days ago or won't have the money in a few days. So, strategies: 1) Work with the payer for better timing of the receipt of the money, 2) Pay bills before application.

I just helped my step-daughter fill out her application the other day. Her father and I just got married last summer, and I didn't even meet his daughter until she came to live with us in Portland at the the age of 21. Although we are married, we do not pool our income. Except one credit card to pay for joint expenses, our finances are completely separate, and any expenses related to his daughter are paid for by my husband.  

So it was really a surprise to me to find out that my income (which happens to be the greater income at this time) needed to be listed together with her father's on the application. You might want to recommend to others in my situation to wait until their children graduate to get married!

"That’s exactly what I tell parents who are thinking of walking down the aisle: 'Wait!' It does not matter whether you pool income or assets. If you are married, then the student has two parents, whose income and assets are to be reported.

We’re right in the middle of filling these out (2 kids in college).  Your article says to take the income amount from box 5 of the w-2.  Box 5 is entitled ‘medicare wages and tips’.  We have amounts in Box 1, ‘wages tips other compensation’ ... Box 14 (minister's housing allowance) ... and Box(es) 12 (taxable life insurance payments and 403b) and 12c.  Do we add those up for the ‘how much did your parents earn’ line on the fafsa?  

Further down it asks for housing allowance and retirement contributions.  It seems like we would be counting them twice.  Any thoughts?

The question "How much did your father/stepfather earn from working" should include the amount in Box 5 of the W-2, plus the pastor's housing allowance.  It already includes the 403b deduction.  The other Box 12 items are not included. 

This question is used to determine an allowance, so it's advantageous to have all your income included. 

The question "What was your adjusted gross income for 2011?"  does not include the housing allowance since it is not subject to federal income tax.  That's why it is added back under the  "untaxed income" section.  Retirement contributions that come out "pre-tax" are treated the same way (added back under "untaxed income").  This is the question where you want your answer to be as low as possible.

It's confusing because it appears that the form is asking the same question twice, but the answer is used in two different calculations.