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?
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 Professional Judgment.
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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