For divorces in 2018 and beyond, alimony is no longer taxable to recipient. I was told that because it is not taxable, it is not included on FAFSA and custodial parent who receives alimony may be more likely to qualify for aid. That does not seem right. Has anyone looked into this issue?
I believe FAFSA asks for all untaxed income such as child support , untaxed interest.
@BelknapPoint probably knows this answer…
IIRC, child support Is not taxable income for IRS purposes…but has always needed to be reported on the FAFSA. I’m going to guess…spousal support is the same.
It just changes where it’s entered on the FAFSA. It MIGHT be helpful for some to qualify for Auto-Zero EFC or Simplified Needs Test though because these two tests are based off of AGI.
Just remember…there is no auto $0 EFC or simplified needs test for schools using the Profile.
And the University of Chicago is the only school I know if that guarantees to meet full need for all accepted students just using the FAFSA…and a very short form of their own.
Those other colleges…FAFSA only…don’t guarantee to meet full need for all…so really except for possible qualifying for a portion of the Pell Grant, there is no guarantee of being “more likely to receive” more need based aid.
Except “more” can still be more without being “full need”.
I expect that when the 2020-2021 FAFSA becomes available in October later this year, the appropriate change will have been made to explicitly include former spousal support in the untaxed income reporting section.
It isn’t specifically mentioned in the 2020-2021 draft, but there is a catch all of “any other untaxed income not mentioned in 92a-92g” for 92h.
file:///home/chronos/u-c75ee81903d5f04a75213275991d6f131b5dd44a/MyFiles/Downloads/1845-00012020-21PDFFAFSA20190329%20(3).pdf
I assume it’s not going to effect a lot of people yet as it’s only for divorces finalized in 2019 or later.
Actually, now that I’ve thought about it, it’s not going to affect ANYBODY until the 2022-2023 FAFSA due to the prior prior year thing.
^^ No, if the parent receives alimony in 2019, he/she will include it on the filing in October 2020 for the 2021-22 school year. It may not be much, but anything paid in 2019 will go on the 2020 filing.
But isn’t spousal support already included someplace on the FAFSA?
Apparently I didn’t think about that quite enough. 
Still, it’s not going to be an issue on this year’s FAFSA for anyone.