Does a Student Need To Claim Federal Work-Study Funds As Income?

Award Year: 2024-25 KA-36766 Helpfulness Rating 3,713 page views

This guidance is specific to the 2024-25 award year and later. For 2023-24* award year guidance see AskRegs Q&A, Does a Student Need To Claim Federal Work-Study Funds As Income?

Yes, however, if an individual does not meet the IRS filing requirements, such as income, he or she is not required to file income taxes. Effective with the 2024-25 award year, if the student is not required to file a tax return, the Federal Work-Study (FWS), the student does not include FWS wages on the FAFSA. FWS earnings will still be excluded from need analysis, but they will not appear on the FAFSA; they will be reported separately by schools in a new reporting process. See AskRegs Q&A, Will Schools Be Required To Report Federal Work-Study Earnings To COD?

For the income thresholds and tax filing requirements, see IRS Publication 17, table 1-2. FWS funds are taxed at the state and federal level, but are generally exempt from FICA taxes, so it is taxable 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 Federal Work-Study Program.

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.