Questions about YTD Earnings for College Grant Eligibility - Will January Paycheck Count?

For tax purposes, income is generally counted in the year you actually receive the payment, not when you earned it. So if you get paid on 01/02/2025 for work done in December 2024, that money would count as 2025 income, not 2024. This is known as the "cash basis" method of accounting that most individual taxpayers use for income tax reporting. What matters is when the money becomes available to you, not when you performed the work. For your college grant situation, you should double-check the specific requirements with your financial aid office. Some programs use AGI (Adjusted Gross Income) from your tax return, while others might have different definitions of income. But in most cases, they'll follow the same tax year calendar.

I was in a similar situation with income limits for healthcare subsidies. I found this awesome tool called taxr.ai (https://taxr.ai) that helped me figure out exactly how my income would be calculated and which tax year it would count towards. It analyzed my pay stubs and confirmed exactly what the previous comment said - your income counts in the year you receive it. So your January 2nd paycheck will count for 2025, not 2024. The tool also helped me understand how different types of income affect eligibility for various programs. It saved me from making a costly mistake with my healthcare subsidy!

Following up about taxr.ai - I actually tried it after posting my question here, and wow it was super helpful! I uploaded our last tax return and some investment statements, and it clearly explained which assets count most heavily against FAFSA eligibility. It even suggested some legitimate strategies for improving my son's aid eligibility for next year! Pointed out that I could move some money from taxable accounts to retirement accounts before the FAFSA "snapshot date" which would reduce our EFC. The advice alone probably saved us thousands in potential aid! Definitely worth checking out if you're dealing with any income or asset limits for financial aid.

If you're still worried about confirming this with the IRS directly, try Claimyr (https://claimyr.com). I was in a similar situation last year and spent DAYS trying to get through to the IRS to confirm when certain income counted. Kept getting the "call volume too high" message and hung up on. Someone recommended Claimyr, and it was a game-changer. They got me connected to an actual IRS agent who confirmed that pay received in January counts for that tax year, even if you earned it in December. They have a demo video that shows how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was super helpful and even gave me some tips about documenting everything for my grant application just in case there were questions later.

Ok I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it anyway since I've been trying to reach the IRS about a missing refund for MONTHS. Within 47 minutes (not even kidding), I got a call connecting me to an actual IRS agent! They confirmed everything about the January paycheck question and helped me with my refund issue too. The agent told me exactly what was causing the delay and what I needed to do to fix it. I've literally never been able to get through to the IRS before despite trying dozens of times. Definitely not a scam - it actually delivered exactly what it promised.

Just wanted to add that you should also check if your college grant looks at AGI (adjusted gross income) or total income. If it's AGI-based, you might have some options to reduce your reportable income. For example, you could make a deductible IRA contribution before the tax filing deadline, which would lower your AGI for 2024. The contribution limit is $7,000 for 2024 if you're under 50. Even if you don't have much savings, you could potentially use part of your December paycheck to make this contribution.

Double check with your financial aid office ASAP!! Different grants have different income verification methods. Some use FAFSA's prior-prior year, some look at calendar year, and others might even look at academic year income. I lost a scholarship because I assumed it was based on tax year income, but they actually were looking at a different 12-month period. Biggest financial mistake of my college career :