How to Answer FAFSA Question #89: Parents' Untaxed Income

FAFSA Question #89 Parents' Untaxed Income

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If your answer to question 55 was "Unmarried and both legal parents living together," contact 1-800-433-3243 for assistance with answering questions 76-89.

89.  Parents' 2021 Untaxed Income (Enter the amounts for your parent(s).)
  1.  Payments to tax-deferred pension and retirement savings plans (paid directly or withheld from earnings), including, but not limited to, amounts reported on the W-2 forms in Boxes 12a through 12d, codes D, E, F, G, H and S. Don’t include amounts reported in code DD (employer contributions toward employee health benefits).
    • $__ , __ __ __ , __ __ __
  2. IRA deductions and payments to self-employed SEP, SIMPLE, Keogh and other qualified plans from IRS Form 1040 Schedule 1—total of lines 15 + 19..
    • $__ , __ __ __ , __ __ __
  3. Child support received for any of your parents’ children. Don’t include foster care or adoption payments.
    • $__ , __ __ __ , __ __ __
  4. Tax exempt interest income from IRS Form 1040— line 2a.
    • $__ , __ __ __ , __ __ __
  5. Untaxed portions of IRA distributions and pensions fromIRS Form 1040—(lines 4a + 5a) minus (lines 4b + 5b). Exclude rollovers. If negative, enter a zero here.
    • $__ , __ __ __ , __ __ __
  6. Housing, food and other living allowances paid to members of the military, clergy and others (including cash payments and cash value of benefits). Don’t include the value of on-base military housing or the value of a basic military allowance for housing.
    • $__ , __ __ __ , __ __ __
  7. Veterans noneducation benefits, such as Disability, Death Pension, or Dependency & Indemnity Compensation (DIC) and/or VA Educational Work-Study allowances.
    • $__ , __ __ __ , __ __ __
  8. Other untaxed income not reported in items 89a through 89g, such as workers’ compensation, disability benefits, and untaxed foreign income not earned from work. Also include the untaxed portions of health savings accounts from IRS Form 1040 Schedule 1—line 12. Don’t include extended foster care benefits, student aid, earned income credit, additional child tax credit, welfare payments, untaxed Social Security benefits, Supplemental Security Income, Workforce Innovation and Opportunity Act educational benefits, on-base military housing or a military housing allowance, combat pay, benefits from flexible spending arrangements (e.g., cafeteria plans), foreign income exclusion or credit for federal tax on special fuels.
    • $__ , __ __ __ , __ __ __

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Application Deadline: September 30, 2023

Why are they asking this information?

The FAFSA asks about your parent’s / parents’ untaxed income as a way to gather relevant income information which might not appear on their Federal tax return. This helps to determine your financial award.

How to answer this question / fill out this section

This question about your parent / parents’ untaxed income is broken into six categories:

  • Payments to tax-deferred pension and retirement savings plans: Check this box if your parent / parents paid towards their tax deferred pension and/or retirement savings plan from their income. These figures can be found on their W-2 statement in Box 12a through 12d, items D, E, G, H, and S. Do not include item DD. Enter the sum of these items.
  • Child support received: Check the box if your parent / parents received child support from a non-custodial parent. Then enter the amount received.
  • Housing, food, and other living allowances paid to military, clergy, and others: Check this box if your parent / parents had received housing payments or benefits (including cash) as a member of the military, as a clergy member, or for any other career or reason. This does not include on-base housing for military. Then enter the amount received.
  • Veterans noneducation benefits: Check this box if your parent/parents received Disability (for veterans), Death Pension, or Dependency & Indemnity Compensation (DIC) and/or VA Educational Work-Study allowances. Then enter the amount received. Do not include benefits from the GI Bill or Post 9/11 GI BIll.
  • Other untaxed income not reported such as workers' compensation or disability benefits: Check this box if your parent/parents have any other untaxed income which had not been reported previously, such as worker’s compensation, disability benefits, etc. Then enter the amount received.
  • Money received or paid on your behalf: Check this box if your parent/parents received money in any fashion to help pay for expenses (education included), which has not been reported any place else on the FAFSA. They will want to report any monies given to them by a relative or third party whose financial information was not listed on this application and is not part of any type of legal support agreement. Enter the amount(s) received.

What is parents untaxed income and benefits?

Untaxed income can be identified as any income that has been earned by a student or parent which does not appear on a Federal tax return.

Oftentimes, students may work jobs with minimal earnings (i.e. babysitting), and are not required to file a tax return. This is seen as untaxed because these earnings are not being reported to the IRS and are not having Federal or state taxes deducted from them. Even if not reported to the IRS via a tax return, these untaxed earnings still must be reported on the FAFSA.

Other than the example above, other types of untaxed income which students and/or parents may receive in a given year are:  Housing, food and other living allowances paid to members of the military, clergy and others, including cash payments and cash value of benefits, child support received, veterans’ non-educational benefits

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