How Is Money Received As an Inheritance Reported On the FAFSA?

Award Year: 2024-25 KA-36696 Helpfulness Rating 6,140 page views

This guidance is specific to the 2024-25 award year and later. For 2023-24* award year guidance see AskRegs Q&A, How Is Money Received As an Inheritance Reported On the FAFSA?

Inheritances are not considered income for federal tax purposes, whether the individual inherits cash, investments or property. Starting with the 2024-25 award year under the FAFSA Simplification Act, money received from an inheritance is not reported on the FAFSA as taxable or untaxed income. It might be included as an asset depending on what the student, spouse, or parent did with the inheritance after receiving it. For example, if the student or parent deposited the inheritance into their savings account, then the value of the savings account would be included as an asset on the FAFSA as of the date the FAFSA is filed. If, however, the student or parent gave the entire amount away or donated it to a charity, it would not be an asset of the student or parent.

See also AskRegs Knowledgebase Q&A, Can We Use PJ To Include Income That Was Excluded From Need Analysis By the FAFSA Simplification Act?

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