<p>This may be a question without a solid answer, but why isn't a state income tax refund adjusted out of AGI in the FAFSA / EFC calculation? Since there was no benefit to overpaying state taxes in the previous year (i.e. itemized deductions do not figure into the FAFSA / EFC calculation), it seems wrong to have to pick up this figure into income in the subsequent year.</p>
<p>Would it be because those funds became available to you in the subsequent year?</p>
<p>I suppose, though it seems like the funds were already counted as available in the previous year.</p>
<p>:deleted:…</p>
<p>Perhaps they are viewed as deferred income…you know income paid to you at a later date. If this is an issue, adjust your withholding so you don’t HAVE a state refund. That’s what we did.</p>