I am a graduating highschool senior going into college. Does this gift need to be reported on the FAFSA and/or CSS? If so, what year? This gift is about 80k and it’s is coming from someone in Italy, if that makes any difference.
It doesn’t need to be reported immediately. The FAFSA and CSS ask for assets as of the date the FAFSA is filed and the tax returns for the prior-prior year. The asset will show up next financial aid filing period (unless she spends it all or something), and the income will show up on the following FAFSA income tax import. Now the CSS asks you to predict your future income, so the gift may need to be reported there as well. But make sure the gift is actually on it’s way, and include an explanation if this is a one-time thing that shouldn’t be factored into future years.
But does the FAFSA or the CSS ask about cash gifts? I’m assuming as I am an incoming freshman, if this cash gift will have an effect, it will be for my junior year of college? 2018 tax year? @AroundHere
The CSS asks about all the money you receive. Mostly the FAFSA just cares about taxable money but I’d have to go back and look at the questions to see if there is something about gifts.
Both forms will look at assets and this 80K is probably going to be cash in the bank or invested in some sort of asset that would be reported sophomore year.
Tax information is for the prior completed tax year (so for the 2018-19 school year, it will be 2017 filed taxes). Assets are filed as of the date of filing. If the $80k is in her bank accounts on the date filed, report it as an asset. If she files on Oct 1 and receives the gift on Oct 10, it will not be reported.
I believe the FAFSA and CSS ask about bills paid on behalf of the parent.
@twoinanddone I think FAFSA does not ask about bills paid on behalf of the parent, but CSS does? Can anyone second this for me?
If it’s not taxable, the gift would go in FAFSA question 94, Parents other untaxed income or benefits.
Yes, one CSS profile school that my daughter applied to ask for the completion of a family expense form: yearly expenses paid for utilities, rent/mortage, entertainment, credit cards, etc. Also, I had to indicate any bills paid by family members on my behalf.
I think question 94 is only asking for income, not gifts. It gives examples of housing for military or clergy, pensions, worker’s compensation.
Here is an answer from a question to a NYTimes finance columnist about a $20k gift to the parent:
[QUOTE=""]
The gift should not be reported on the Fafsa because it was given to your husband and not your son. Cash support to the student must be reported as untaxed income on the Fafsa. Cash support to the student’s parents is not reported on the Fafsa.<<
[/QUOTE]
This ambiguity is driving me insane.
It’s not ambiguous. On the FAFSA the gift is not reported, but it may be an asset if it is in your mother’s possession on the day you/she file.
On the CSS, you’ll have to see if a question is asked about a gift. A gift is not considered income for tax or FAFSA purposes.
The federal instructions say “any” other untaxed income or benefits. Any is pretty broad.
There is a list of income sources that do not have to be reported here. Gifts are not among the exceptions.
Instructions here https://studentaid.ed.gov/sa/sites/default/files/2018-19-completing-fafsa.pdf
It’s ambiguous because you guys are saying completely different things. @AroundHere @twoinanddone
I guess ambivalent is the better word
A gift is not income. Someone gives you a $2000 mink coat, it’s not income and never will be taxed that way. If your employer gives you a mink coat, it may really be income if he’s giving it instead of paying you for work.
Why is your mother getting $80k? Is it an inheritance or gift, which is not income, or is it for work she’s done?
If she still has it in a bank account or investment on the day you file the next FAFSA, you’ll have to report it as an asset, not as income.
It’s from a family member. My mother is nearing retirement and is still paying off the house. It is strictly a gift, she did nothing to receive it other than be a loving family member. Our whole family is incredibly close, no matter how far we are apart geographically. Typical Italian family I guess haha. @twoinanddone
Don’t read more into the questions than asked. If it is not income, don’t report it as income.
If they give her $80k to pay off the house, and she does that, it is not going to be reported on the FAFSA as equity of primary residence is not considered. For the CSS you’ll have to answer the questions asked. Home equity is asked, but it is not unusual for a family to have a lot of equity in the primary residence. Schools don’t all consider it.
I’m guessing it doesn’t count then – If the actual experts say it’s not income, then you don’t declare it as income. If she spends the money paying off her house, then home equity doesn’t count on the FAFSA (but may for many schools count on the CSS).