Why wouldn't the forms call it out then? FAFSA explicitly calls out the first-time homebuyers tax credit as being considered "other untaxed income". How many people could this apply to?
who seems to base his opinion on IRS taxability, which obviously doesn't apply to untaxed income
He is looking at the IRS code for guidance on what is considered "income", whether taxable or not. Without explicit instructions otherwise from the forms, this seems pretty reasonable to me.
There are many ways the form could be worded to indicate you have to report any money you received during the year, as opposed to "income". The form doesn't, though.
It gets asked for the student (line 44j), but that line does not appear in the parents' section.