Simplified Needs Test Chart

In certain circumstances the Federal Need Analysis Methodology uses a simplified needs test to calculate the Expected Family Contribution (EFC). This simplified formula ignores assets, thereby increasing eligibility for financial aid. An applicant qualifies for the simplified needs test if the parents have an adjusted gross income of less than $50,000 and every family member was eligible to file an IRS Form 1040A or 1040EZ (or wasn't required to file a Federal income tax return). (Please note that starting in 2004, the AGI threshold for IRS Form 1040A and IRS Form 1040EZ changed from $50,000 to $100,000. Nevertheless, a threshold of $50,000 is still used for the simplified needs test.)

Thus to determine whether the applicant is eligible for the simplified needs test, we need to determine whether a tax filer was required to file a Form 1040 instead of a Form 1040A or 1040EZ. A tax filer was required to file a Form 1040 if line 42, Taxable Income, is greater than $100,000, or if amounts other than zero appear on the following lines:

If none of the above conditions apply, the tax filer was eligible to file a Form 1040A or 1040EZ but chose to file a 1040 for other reasons. (For example, some tax preparers file a Form 1040 even if the taxpayer is eligible to file a Form 1040A or 1040EZ.) In this case, the tax filer should be treated as if he or she filed a Form 1040A or 1040EZ for the purpose of determining eligibility for the Simplified Needs Test.

Note: Since 1999-2000, taxpayers who itemize deductions on Schedule A of Form 1040 are now considered to be required to file a 1040 and hence ineligible for the Simplified Needs Test.

Note: If the parent takes a Form 8814 election, whereby they elect to include interest and dividend income from a child under age 18 (age 14 in 2005 and before) on the parent's income tax return, they cannot file an IRS Form 1040A or 1040EZ. This makes them ineligible for the Simplified Needs Test.