<p>My son will be a HS senior this fall. He will graduate from HS in June 2007, and enter college in the fall of 2007. If we apply for financial aid I will fill out the FAFSA on Jan 1 2007. In this case will my income for calendar year 2006 be the only year considered? I was just wondering, because my income in 2006 will be significantly lower than 2005, and likely will be higher again in 2007. Am I well positioned for my son to perhaps be eligible for financial aid for the school year 06/07? My basic question I guess is for the initial fin aid calculations do they only consider your latest tax return?</p>
<p>Yes. The FAFSA only asks for the tax information from the prior year.</p>
<p>Well..the FAFSA only asks for one year of income. However, many private colleges in particular ask for tax returns for TWO prior years (the FAFSA year and the one prior to that). We had to do two year tax return submissions (including all W-2, and 1099 forms) for all of the private schools to which DS applied. Some schools do verification of some finaid applications also, and we won the lotto on that one too...for three years...and we again had to submit two years worth of tax returns and forms as verification. So...while the FAFSA calculates on that one year, there is the chance that the school may require more. OH...for the PROFILE IDOC we also had to submit two years of tax returns for some schools.</p>
<p>Seconding what thumper said; we also did two years of taxes for S's school this year. But, the FA seemed to be based on the last year (which was signigicantly lower). We got our first real FA ever! yay!</p>
<p>Both FAFSA and Profile only look back at the prior full calendar year, in your case, 2006. A percentage is assessed against that year's income, after some exclusions and allowances, to come up with your contribution from income.</p>
<p>What some others are alluding to is the common practice of private schools to ask to see the prior two years of tax returns. How they use that info is not publicly stated as far as I know. However, one can assume that cross-checking is done if abuse or fraud is suspected.</p>