Filling out the Free Application for Federal Student Aid, or FAFSA form is nobody’s idea of fun. However, it’s absolutely necessary if you want to receive financial aid, and you must submit it annually. One big question: What do you report, gross income vs. adjusted gross income, on the FAFSA?
Adjusted Gross Income for FAFSA
Question 85 on the FAFSA requires reporting your parent’s adjusted gross income. That is considered their actual income after they have made allowable deductions. You can find this information on the IRS 1040 form on line 37, or, if they filed form 1040A, on line 21 or on line 4 of form 1040-EZ.
Other Types of Tax Forms
If you, or your parents, filed another type of tax form, such as the Puerto Rican tax form or a foreign form, look for the information on that form’s lines that most closely resemble an IRS form.
Recent FAFSA Changes
As of the 2017-2018 FAFSA, you may file earlier than previously allowed. Formerly, the FAFSA could not be completed and submitted prior to January 1 of the FAFSA calendar year, but the date has been permanently changed to October 1 of the prior year. For example, for the 2018-2019 year, you may have filed your FAFSA as early as October 1, 2017. An even more important change concerns tax year reporting. Now, rather than reporting information from the prior tax year, you will report the IRS AGI from two years previously. For 2018-2019, for example, you must report adjusted gross income for FAFSA for 2016, not 2017. Why did FAFSA make these changes? Before, the adjusted gross income for the prior tax year may not have been available, and applicants often had to estimate the numbers. That also meant that you may have had to make changes later on in the process after completing that year’s tax forms. Now, the tax information that FAFSA seeks is already available. The extra three months for filing permits more students to meet deadlines and to get a better idea of what financial aid is available.
Income Changes and New Rules
What happens if your family’s financial situation is different than it was two years earlier? You can’t report the latest tax year instead. However, if your family experienced a considerable loss of income in the past two years, the U.S. Department of Education recommends contacting your school’s financial aid office and explain the circumstances. These offices can make adjustments to your financial aid package based on your new information.
A graduate of New York University, Jane Meggitt's work has appeared in dozens of publications, including PocketSense, Zack's, Financial Advisor, nj.com, LegalZoom and The Nest.