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Retirement Income

Jaime100Jaime100 Posts: 2Registered User New Member
I am 61 and retired from a local government. I have a defined benefit plan. Does this form of retirement income count in determining a family's ability to pay for college? (I apologize if this has already been asked and answered.)
Post edited by Jaime100 on

Replies to: Retirement Income

  • swimcatsmomswimcatsmom Posts: 15,013Registered User Senior Member
    Maybe. If it is taxable income it will be included in your AGI so will be included in the AGI you report on FAFSA so then it definitely will be included. If it is untaxed it probably will still be included. FAFSA does require that you report untaxed income but there are some exceptions. For instance, my husband is retired and his federal pension is not taxed as our other income is not high enough to make it taxable. We have to report the pension income as untaxed income on FAFSA. There is some untaxed income that does not have to be reported, mostly means tested benefits.
    Don’t include student aid, earned income credit, additional child tax credit, welfare payments, untaxed Social Security benefits, Supplemental Security Income, Workforce Investment Act educational benefits, combat pay, benefits from flexible spending arrangements (e.g., cafeteria plans), foreign income exclusion or credit for federal tax on special fuels.

    Certain income and benefits should not be reported in Questions 94 and 95:

    • Student financial aid. Student aid received is already taken into account when a school packages your aid. However, work-study earnings must be reported as taxed income in the income questions of the Student’s Income and Assets section.

    • Food stamps and other programs. Benefits received from federal, state or local governments from the following programs are not counted as untaxed income: the Food Stamp Program; Special Supplemental Nutrition Program for Women, Infants and Children (WIC); Food Distribution Program; Commodity
    Supplemental Food Program; National School Lunch and School Breakfast Programs; Summer Food Service Program; and Special Milk Program for Children.

    • Dependent Assistance. You may be eligible to exclude a limited amount of benefits received for dependent care assistance if certain requirements are met. Generally, up to $5,000 of benefits may be excluded from an employee’s gross income, or $2,500 for a married employee who files a separate return from his or her spouse. This exclusion cannot exceed the employee’s (or his or her spouse’s) earned income. (Note: Some states provide reimbursement for childcare expenses incurred by welfare recipients through Temporary Assistance for Needy Families
    [TANF]. You must report this on the application because you bill the state for the amount of childcare costs incurred while on welfare and are reimbursed on that basis.)
    Per capita payments to Native Americans. You should not report individual per capita payments received in 2008 from the Per Capita Act or the Distribution of Judgment Funds Act unless any individual payment exceeds $2,000. Thus, if an individual payment were $1,500, you would not report it on your application. However, if a payment were $2,500, you would report the amount that exceeds $2,000: $500.
    • Heating/fuel assistance. Exclude from consideration as income or resources any payments or allowances received under the Low-Income Home Energy Assistance Program (LIHEAP). (Note: Payments under the LIHEAP are made through state programs that may have different names.)

    One way that it might not be considered by FAFSA is if your AGI is below $30k. If your AGI is below $30k and you meet other criteria for the automatic 0 EFC (eligible to file a 1040a or 1040ez tax return, someone in the family receives certain means tested benefits, displaced worker) then you can qualify for the automatic 0 EFC and the other untaxed income is not looked at as the <$30k AGI and other eligibility elements are all that are needed for the automatic 0.

    For schools that require CSS - I don't know how they regard it.
  • Jaime100Jaime100 Posts: 2Registered User New Member
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