What Year Tax Return for FAFSA 2024-25?
Understand the specific tax year required for your 2024-25 FAFSA application and accurately prepare your financial aid submission.
The Free Application for Federal Student Aid (FAFSA) is the gateway to federal student aid. For the 2024-2025 academic year, applicants must provide financial details from the 2022 tax year. This application determines a student’s eligibility for federal assistance, including grants, loans, and work-study programs. Accurate reporting of financial information is important for a precise aid determination.
Understanding the Prior-Prior Year Rule
The “Prior-Prior Year” (PPY) rule dictates that the FAFSA uses tax information from two years before the academic year for which aid is sought. This approach was implemented to streamline the application process, allowing students and families to complete the FAFSA earlier with already filed and completed tax returns. This rule provides more reliable income figures and helps avoid the need for income estimations.
This system enables applicants to submit their FAFSA much sooner, typically in the fall prior to the academic year. The shift to PPY has also increased the usability of automated data transfer tools, simplifying the overall application experience for students and their families.
Gathering Your Tax Information
To accurately complete the 2024-2025 FAFSA, applicants will need specific financial documents from the 2022 tax year. The primary document is IRS Form 1040. Additionally, W-2 forms, detailing wages, salaries, and tips from employers, are necessary.
Various 1099 forms are also relevant, such as Form 1099-INT for interest income, Form 1099-DIV for dividends, and Form 1099-NEC for nonemployee compensation. Applicants can typically access these records through their personal tax files, employer portals, or financial institution statements.
If personal copies are unavailable, tax transcripts can be requested directly from the IRS free of charge. This can be done online through the IRS “Get Transcript” service, by mail using Form 4506-T, or via an automated phone service at 800-908-9946. The IRS Direct Data Exchange (DDX) is the preferred method for transferring tax information directly into the FAFSA, requiring consent from all contributors.
Reporting Income and Assets on FAFSA
The information gathered from your 2022 tax documents translates to specific sections on the FAFSA. The Adjusted Gross Income (AGI), typically found on line 11 of IRS Form 1040, is a key figure in calculating financial aid eligibility. The FAFSA also requires reporting of certain untaxed income from the 2022 tax year, such as the untaxed portions of Individual Retirement Account (IRA) distributions and pensions.
For the 2024-2025 FAFSA, child support received is now reported as an asset, rather than untaxed income. Beyond income, the FAFSA asks for current asset information as of the day the form is completed, not from the prior-prior year. This includes balances in savings, checking, and cash accounts, as well as the net worth of investments like stocks, bonds, and mutual funds.
Assets that are generally excluded from FAFSA reporting include the equity in the primary residence, the value of life insurance policies, and the value of retirement accounts such as 401(k)s and pensions. The Student Aid Index (SAI), which replaces the Expected Family Contribution (EFC), is calculated using this income and asset data.
Addressing Special Financial Circumstances
A family’s financial situation can change significantly between the 2022 tax year and the present. If current circumstances differ substantially from the prior-prior year data, applicants may be able to appeal their financial aid eligibility. This process is known as “professional judgment” or “special circumstances review.”
Such reviews are handled directly by the financial aid office at each college the student plans to attend, not through the FAFSA form itself. Common reasons for considering a professional judgment include job loss, significant unreimbursed medical expenses, the death of a parent, or the impact of a natural disaster. Financial aid offices will require specific documentation to support any claims of changed circumstances.