The Free Application for Federal Student Aid, or FAFSA, asks you a series of questions about your income, based on your tax filing from the previous year. For example, if you applied for financial aid for the 2014-2015 year, you would have reported figures from the 2013 tax year. Question number 36 requires you to list your adjusted gross income, or AGI, and question 39 and 40 ask for your income earned from working. If married, you'll answer these questions based on both your and your spouse's figures.
Figuring Your AGI
Your AGI is your gross or total income less specific allowable adjustments. It is not your taxable income, as you still need to subtract your standard or itemized deductions and any other exemptions from your AGI to calculate that figure. These include things such as student loan interest, contributions to an individual retirement account, moving expenses, alimony, and other adjustments on lines 23 through 35 of your 1040. You can apply these deductions even if you take the standard deduction instead of itemizing your deductions. You'll find your AGI on line 37 of a 1040, line 21 of a 1040A, or line 4 of a 1040EZ.
Income Earned From Working
Your income earned from working combines your wages, salary and tips with any business or farm income you earn. Your W-2 lists your wages, salary and tips in box 1. You can also find it on line 7 of your 1040. If applicable, your business income or loss is on line 12 of your 1040 and Schedule C or CZ, while any farm income or loss is listed on line 18 and Schedule F. If you you're self-employed, you'll also need to add any K-1 income. This is located in Box 14 on the form. If you use Form 1040A instead of Form 1040, your’ working income is on line 7 of the form. The 1040EZ lists this figure on line 1.
Streamlining the Process
You can have many of the amounts from your tax return prefilled if you use the online FAFSA application and the Internal Revenue Service's Data Retrieval Tool, called DRT. This can make it much easier and quicker to complete the FAFSA questionairre. If you've filed your taxes electronically, the data is available two weeks later. If you filed a paper return, it can take six to eight weeks to access the IRS data to transfer to the online FAFSA.
Other DRT Issues
If you're eligible to use the IRS DRT, you'll have to explain any numbers that don’t match the IRS figures. Also, you can't use the IRS DRT if you have a spouse and file separate returns, get married after January 1st of the tax year your using, or do not file a tax return in the referenced tax year. If your application has to be verified for FAFSA purposes, you'll either have to update your income numbers using the DRT system or provide a tax transcript from the IRS.
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