Social Security and Financial Aid

<p>I receive Social Security death benefits on behalf of my children because their dad passed away a couple years ago. The benefits will cease when they finish high school. Aside from that money we're pretty low-income. I am wondering how the SS factors into financial aid for my kids when they're college-bound. My son is going into his senior year this fall. When I have to fill out all the paperwork (FAFSA, etc.), does the SS have to be listed as income?</p>

<p>No, Social Security benefits of any type are specifically excluded from income for FAFSA reporting.</p>

<p>Well, that should put us in poverty level then. :/</p>

<p>Thanks for your reply.</p>

<p>I mistyped and should have said untaxed SS benefits are not reportable!</p>

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<p>If part of the etc. is the CSS Profile, it does count untaxed SS benefits for family members except the student as parental income.</p>

<p>@sk8rmom -- how do you know what portion of SS benefits are taxable?</p>

<p>Our situation: DH was recently approved for SS disability and received a lump sum payment (for the many months while his application was being processed) plus will be getting monthly payments going forward. I continue to be employed, so we have a middle/upper middle family income. I presume that at the end of the year we will be getting some kind of a notification from SocSec telling us how much is taxable, but do you have any idea what the formula is?</p>

<p>We've stashed most of the lump sum in anticipation of having to pay part of it in taxes, but it would be really helpful to know, and also be able to anticipate what kind of impact it will have on DS's financial aid for 2011-12.</p>

<p>When you do your tax return there are specific calculations involved in determining taxability of SS - see the link to IRS Pub 915 below. My (minor) children who received benefits on their dad's account did not have enough other income to have tax liability so I don't have much experience with figuring this out...think I only did it for my father's retirement benefits for a few years while he was still working. If you have tax software, I would just run some projected numbers through the 2009 version to get a ballpark idea of how much wil be taxable.</p>

<p>Publication</a> 915 (2009), Social Security and Equivalent Railroad Retirement Benefits</p>

<p>Thanks, that's very helpful.</p>

<p>The FAFSA Frequently asked questions and background information tabs are really helpful and complete. I have used them to figure out the correct way to fill out social security stuff.</p>