Changes to reporting parent and student income

The 2024-25 FAFSA will directly receive all income from Federal Tax Information shared by the IRS after a contributor provides consent. Income not reported on the US federal tax return, primarily types of untaxed income asked for in the past, will no longer be entered. Child support received will now be entered in the Parent Asset section.

What untaxed income is no longer counted?

Untaxed income that is not reported on the US federal tax return and is no longer be counted, includes:

  1. Pre-tax contributions to employer retirement plans. These include employer 401k, 403b and other pension or retirement plans.
  2. Housing, food and other living expenses paid to military members, clergy and others.
  3. Veterans non-education benefits.
  4. Workers’ compensation.
  5. Disability benefits.
  6. Money received by or paid on behalf of the student.

What untaxed income is still counted?

Untaxed income that is reported on the 2022 federal tax return and counts, includes:

  1. Tax-exempt interest earned (1040, line 2b)
  2. Untaxed retirement distributions, including untaxed IRA distributions (1040, line 4b – line 4a) and untaxed pension income (1040, line 5b – line 5a)
  3. Tax deductible payments to a traditional IRA (Schedule 1, line 20)
  4. Tax deductible payments to self-employed SEP, SIMPLE, KEOGH and other qualified plans (Schedule 1, line 16)

What untaxed income will have to be reported?

Foreign income earned in 2022, but excluded from taxable income, would have to be reported. This is known as Foreign Earned Income Exclusion and can be found on Schedule 1, line 8d.

What if no Federal Tax Information (FTI) is shared from the IRS?

If no FTI is shared, the parent or student will manually enter income and tax information. For more information, see New requirement to consent to share Federal Tax Information (FTI).

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