This guidance is specific to the 2024-25 award year and later. For 2023-24* award year guidance see AskRegs Q&A, Do We Count Disability Income As Untaxed Income?
It depends on whether it is taxable or untaxed income. Untaxed Social Security benefits, including Supplemental Security Income (SSI/disability) and Social Security Disability Insurance (SSDI) income are not reported as untaxed income on the FAFSA and they are not included in the calculation of the student aid index (SAI) or anywhere else in need analysis. Starting with the 2024-25 award year under the FAFSA Simplification Act, the same is true for all other untaxed disability benefits or income, such as non-SSI state disability benefits, Department of Veterans Affairs (VA) disability, and other untaxed disability income.
All taxable Social Security and other disability benefits, including any taxable SSI and SSDI, are included as taxable income in the adjusted gross income (AGI) on the FAFSA and in the SAI calculation. If part of the individual's Social Security benefits are taxable, the individual must file a 1040 tax return. If the individual was not required to file a tax return, the benefits are untaxed income and therefore not reported on the FAFSA. The individual uses IRS Publication 915 to determine whether or not Social Security benefits are taxable.
See also AskRegs Knowledgebase Q&A, Are Untaxed Social Security Benefits Considered Untaxed Income?
Student Aid Reference Desk: For additional information, try the Student Aid Reference Desk. It is a central hub of all the important financial aid resources you need with direct links to legislation, regulation, Dear Colleague Letters, and other ED and NASFAA references. It is updated on a rolling basis with the latest news and changes. Search Verification and Need Analysis.
AskRegs Q&As represent NASFAA's understanding of regulatory and compliance issues. They are FOR INTERNAL USE ONLY. While NASFAA believes AskRegs Q&As are accurate and factual, they have not been reviewed or approved by the U.S. Department of Education (ED). If you should need written confirmation of AskRegs information for audit or program review purposes, please contact your ED School Participation Division. NASFAA shall not be liable for technical or editorial errors or omissions contained herein; nor for incidental or consequential damages resulting from the furnishing, performance, or use of this material.
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