FAFSA Income and Asset Reporting 1 — Questions and Answers
Question 1: Which income is reported on the FAFSA as untaxed income?
- Regular wages
- Child support received (Correct answer)
- Inheritance received
- Savings account interest
Correct answer: Child support received
Child support received is reported as untaxed income on the FAFSA and is counted toward the household's financial resources.
Question 2: How are 529 college savings plans owned by a parent reported on the FAFSA?
- As student assets
- As parent assets (Correct answer)
- They are not reported
- As income in the year of distribution
Correct answer: As parent assets
A 529 plan owned by a parent is reported as a parent asset on the FAFSA and is assessed at a lower rate than student assets.
Question 3: Which of the following is considered a student asset on the FAFSA?
- Parent's retirement account
- A savings account in the student's name (Correct answer)
- The family home
- Parent's business equity
Correct answer: A savings account in the student's name
A savings or checking account in the student's name is considered a student asset and is assessed at 20% in the SAI formula.
Question 4: Social Security benefits received by the student or parents are reported as:
- Taxable income only
- Untaxed income if not included in AGI (Correct answer)
- Parent assets
- Not reported at all
Correct answer: Untaxed income if not included in AGI
Social Security benefits that were not included in the adjusted gross income are reported as untaxed income on the FAFSA.
Question 5: What is the FAFSA treatment of a student's Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act (UTMA) account?
- Parent asset assessed at 5.64%
- Student asset assessed at 20% (Correct answer)
- Not reported
- Counted as income in the year received
Correct answer: Student asset assessed at 20%
UGMA/UTMA accounts in the student's name are reported as student assets on the FAFSA and assessed at the higher 20% rate.
Question 6: Which of the following income sources does NOT need to be reported on the FAFSA?
- Wages from a summer job
- Inheritance from a grandparent
- Veterans non-education benefits
- Life insurance payouts (Correct answer)
Correct answer: Life insurance payouts
Life insurance payouts are generally not reported on the FAFSA as they are not considered income or an ongoing financial resource.
FAFSA Income and Asset Reporting 1
Which income is reported on the FAFSA as untaxed income?