FAFSA uses AGI or taxable income? Need help with income appeal strategy

For the FAFSA and financial aid calculations, your Adjusted Gross Income (AGI) is what matters most. Colleges primarily look at AGI rather than taxable income when determining your Student Aid Index (SAI). The FAFSA uses your AGI from line 11 on your 1040 tax form, and then makes some adjustments to calculate your Expected Family Contribution. So if your AGI was higher in 2023 than 2022, an appeal might not be beneficial since you'd be showing higher income.

my daughter went through something kinda similar last yr. the financial aid ppl definitely used AGI not taxble income, we tried to explain about some biz losses but they didnt care much. they just kept saying AGI is what the system uses!!

Professional financial aid advisor here: AGI is definitely the primary number used in the FAFSA SAI calculation. However, there are specific situations where you can file a Professional Judgment appeal (also called a Special Circumstances appeal). These typically include: - Loss of employment or reduction in income AFTER the tax year being used - Unusual medical expenses not covered by insurance - Support of extended family members - One-time income events that artificially inflated your AGI If your 2023 AGI is higher than 2022, AND you don't have special circumstances like above, an appeal likely won't help. The business write-off already reduced your AGI compared to what it would have been, so that's actually already helping your aid eligibility.

I tried going through this whole mess last year and spent WEEKS trying to get someone at Federal Student Aid to explain how they calculated everything. Would call and get disconnected after waiting for 2+ hours! FINALLY someone told me about Claimyr.com which got me through to a real person in like 10 minutes. They have this video showing how it works: https://youtu.be/TbC8dZQWYNQ Anyway once I actually talked to someone, they confirmed it's definitely AGI they use most, not taxable income. They walked me through exactly what numbers they were using from my tax return and how they calculated my SAI.

Everyone here is focusing on FAFSA but if your kid is applying to private schools they might also need the CSS Profile which DOES look at some things differently than FAFSA! My son's school looked at both AGI and our home equity and retirement accounts!

Just wanted to add that while AGI is the main factor, you should also remember that FAFSA is now using the SAI (Student Aid Index) instead of the old EFC (Expected Family Contribution). The new calculation works a bit differently, but the income methodology is still very similar. The key thing is understanding if your business write-off was a one-time thing or recurring. If it was unusual/one-time, you MIGHT have grounds for an appeal based on that specific circumstance.

do u have any other kids in college already????? thats a BIG factor too!!!!! we got wayyyy more aid when we had 2 in at once vs just 1!!!

Coming back to add something important - when looking at your tax forms, the FAFSA uses the AGI (line 11 on your 1040), but also considers untaxed income and certain deductions. So while your taxable income isn't the main factor, some of the deductions that reduced your taxable income might still be added back in for FAFSA purposes. For example, if your write-off included pre-tax contributions to retirement plans or health savings accounts, those might be added back when calculating your SAI. The complete formula is quite complex, which is why financial aid offices have specialized software to calculate it all.

As someone who just went through this process last year, I can confirm what others have said about AGI being the key number. My situation was similar - I had some business expenses that lowered my taxable income, but my AGI actually went up from the previous year. I initially thought about filing an appeal but after talking to three different financial aid offices, they all told me the same thing: unless you have a true change in circumstances (like job loss, medical emergency, etc.), the appeal won't help if your AGI increased. One thing I learned is that the business write-offs you're taking are actually already helping your financial aid eligibility by keeping your AGI lower than it would be without them. So in a way, you're already getting the benefit! Save yourself the time and paperwork unless you have one of those special circumstances the financial aid advisor mentioned earlier.

I just want to echo what everyone else has said - AGI is definitely what they use for FAFSA calculations. I went through this exact confusion when my son applied two years ago. I kept focusing on our taxable income because it had dropped significantly due to some legitimate business deductions, but the financial aid offices only cared about our AGI which had actually increased. One thing that helped me understand it better was thinking about it this way: the FAFSA is designed to measure your family's actual ability to pay for college based on your total income before you make choices about deductions and tax strategies. Your AGI represents that "real" income level better than your final taxable income after all the write-offs. Since your AGI went up from 2022 to 2023, even with the business write-off helping to keep it lower than it could have been, you probably won't benefit from an appeal. Save your energy for making sure all the other parts of your FAFSA are filled out accurately!

I'm new to this whole FAFSA process and reading through everyone's responses has been incredibly educational! My family is in a similar boat - my husband's business had some significant equipment purchases last year that created deductions, but our overall income still went up. Based on what everyone is saying about AGI being the key factor, it sounds like we shouldn't expect those business deductions to help us much with financial aid since they're already factored into our AGI calculation. One quick question for those who've been through this - when you filled out the FAFSA, did you find any sections particularly confusing or easy to mess up? I want to make sure I don't make any errors that could delay our aid processing. Thanks to everyone for sharing their experiences - this community is such a valuable resource!