My husband died a few weeks ago, after a brief illness. We have a junior in college and a senior in high school who is in the process of applying. We have filed claims for his life insurance policies but have not received any of the proceeds yet.
Is it necessary for me to enter the expected life insurance money on the FAFSA and CSS Profile forms? I am in the process of completing the forms now. On both, there is a section asking me to list “untaxed income & benefits”. In past years, we simply provided our FSA & 401K contribution. The words “life insurance” do not appear anywhere on either form (that I can find).
I am self-employed, earning a small income from a home-based business. Thanks in advance for your help.
A life insurance death benefit is not reported on either form as any type of income, but any of those funds that are in your possession (not simply expected) at the time of form completion must be reported as an asset.
Did you previously file the 2017/18 FAFSA and CSS profile for your college junior?
The FAFSA and CSS profile for 2018/19 (senior year of college child 1/freshman year of college child 2) is not available until October 1.
I would suggest to file the FAFSA this weekend when it first opens. If you don’t have the life insurance payout by then, you won’t have to list it under assets.
I understand that the timing is tricky, and potentially beneficial to me. The CSS Profile is available now, which prompte ed my concern. Parental Income section asks the following:
"Enter the amounts the student’s parents received or expect to receive in 2017 for the following:
Parent’s income from work *
Other taxable income*
Untaxed income and benefits*
What are the source(s) of this untaxed income? "
I appreciate your condolences. So much to handle right now and helping my children is my priority.
Insurance proceeds are NOT income, earned or unearned, so they aren’t reported in that section.
As stated above, if they are in a bank account it may be considered an asset but at this time you haven’t received any of the money. Because you probably filed a joint tax return in 2016, you’ll have to unwind the income. You report assets and marital status as it is now, but income for the parent filing as it was in 2016.
Since you are filing based on 2016 income and your H has passed away, you might want to consider informing just the school your older child attends and those that your younger child winds up with as serious contenders of this fact and they might improve any FA awards based on that.
On the 2018/19 FAFSA you would just report your income, if any from 2016. If the tax return was filed jointly with your husband that year, you won’t be able to use the IRS data retrieval tool and you would have to separate out your portion of the combined income.
The college might require proof of your 2016 income.