I am disabled due to illness, but my husband holds a paying job. As a result, we meet the threshold where my long term disability (LTD) benefits and part of my SSDI benefits are taxed, and are included in our 2019 1040 AGI. I have gathered from the forum that I need to include these taxable disability amounts in our FAFSA profile, but where? I did not receive this disability income (LTD and SSDI) from “working” and it is not untaxed, so it does not fit as an “other untaxed income or benefits” although it is a disability benefit, which this category includes. Do I include this taxed disability income as part of my “parent income from work” even though I did not get the income working? Or do I include both as disability benefits and ignore the fact that they are taxed (and not untaxed as the category is headed)? Does it only matter that I don’t report it twice? I just keep going in circles… Thank you for any advice!
If your disability income is taxed, you don’t report it separately; it is already reported in AGI. You only report separately any untaxed income. Sounds like you don’t have any untaxed disability income, so no separate reporting.
I can’t find the answer to the specific question of whether it is considered income from work. I would include it, because the instructions do not contain any indication that you should not … and there is nothing in the Federal Student Aid Handbook that says you should exclude it from income earned from work.
Any part of your LTD and SSDI benefits that are taxable and included in your AGI as reported on line 8b of your 2019 IRS form 1040 will be reported on FAFSA line 84 (Parents’ AGI for 2019). This is where it will be reported once. Any untaxed portion of your SSDI benefits will not be reported on FAFSA.
Let me clarify … IF you report the taxable disability on the same 1040 line as W-2 wages, you would include in income from work. But if it’s reported on a tax return line not cited in the FAFSA instructions as one that is included in income from work, then you would NOT include it as income earned from work.
Thank you both for your replies. I had overlooked the inclusion of our AGI in question 84 because it was transferred from our tax return. The LTD income is reported on 1040 line 1 with wages, so I will include that as “income from work.” However, the taxable portion of SSDI is reported on 1040 line 5b, and included in the AGI. It sounds like I do NOT include this as “income from work” nor should I mention it as an “other benefit,” so it will only be mentioned as part of our AGI.
This all sounds correct. Kudos to kelsmom for catching the inclusion of the taxable portion of the LTD in wages.