October 5 , 2005
Volume 2005 – Issue 53
FAFSA Processing Guidance
During the 2005 annual conference of the National Association of Student Financial Aid Administrators the U.S. Department of Education explained how to report combat pay on the FAFSA. Depending on whether an individual is a tax filer or a nonfiler different rules apply. For non-tax filers, the total amount of combat pay should be reported only as income earned from work (questions 38-39, 76-77). None of the combat pay should be reported as untaxed income on Worksheet B.
For tax filers, the following rules apply:
- If all of the combat pay is nontaxable, the full amount should be reported both as earnings from work and on Worksheet B. Do not include the nontaxable combat pay in AGI.
- If all of the combat pay is taxable, it will be included in AGI and the full amount should be reported as income earned from work.
- If the combat pay is partially taxed, the full amount of the combat pay should be reported as income earned from work, and only the nontaxable portion should be reported on Worksheet B.
Please note that there will not be a paper version of Renewal FAFSAs for the 2006-2007 award year. Students will instead receive a 2006-07 Renewal Reminder Notice informing them of how and when to apply using Renewal FAFSA on the Web. This reminder will be sent to renewal-eligible students in November or December of this year with a follow-up reminder in February 2006.
Any questions related to this Bulletin should be directed to UHEAA Policy and Training at 801.321.7166 or by e-mail to mjohnson@utahsbr.edu.