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Income and Asset Reporting Flashcards

6 cards from real FAFSA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Income and Asset Reporting flashcards as text

  1. How does the FAFSA treat assets held in a grandparent-owned 529 plan?

    Answer: Not reported at all under new rules

    Under FAFSA Simplification Act changes effective 2024-25, grandparent-owned 529 distributions and accounts are no longer reported on the FAFSA.

  2. Rental property owned by parents is reported on FAFSA as:

    Answer: A parent asset (net value)

    Rental properties are reported as parent assets on the FAFSA at their net value (market value minus any debt owed).

  3. What is the FAFSA income protection allowance (IPA)?

    Answer: An amount of income excluded from the SAI calculation to cover basic living expenses

    The Income Protection Allowance (IPA) is an amount of income that is shielded from the SAI calculation to account for basic living and family expenses.

  4. How are tips and unreported cash income treated on the FAFSA?

    Answer: They must be reported as income even if not on a tax return

    All income including cash tips and other unreported earnings should be accurately reported on the FAFSA, even if not reflected on a tax return.

  5. What is included in the definition of 'assets' for FAFSA purposes?

    Answer: Cash, savings, investments, and real estate (excluding primary home)

    FAFSA assets include cash, savings accounts, checking accounts, investments, and real estate other than the primary home.

  6. A parent who is self-employed must report business income on FAFSA using:

    Answer: Net profit from Schedule C or Schedule F

    Self-employed parents report their net profit from Schedule C or Schedule F of their federal tax return as income on the FAFSA.