SS lump sum repaid to parent's employer -- HELP?

Paying for College
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<p>I'll be a junior at university next year. Our family has had similar FAFSA info and financial aid packages each year at my university. </p>

<p>However, in January 2011 my mom began receiving Social Security Disability along with several years of back pay, resulting in a large lump sum payment. This SS back pay resulted in a one-time higher AGI for this tax year. In fact, AGI nearly doubled for this reason only! Our well-respected CPA prepared our taxes accurately and we reviewed them.</p>

<p>Mom was required (by legal contract) to return nearly all of this SS back payment to her previous employer as reimbursement for long-term disability they paid for several years and did so promptly. Therefore, we do not have, and never had use of, the back pay reflected in this year's "inflated" AGI. </p>

<p>My FinAid office has asked us to fill out a form explaining we don't have this back pay (including our documentation), and I was led to expect an accurate FinAid adjustment, but I remain very anxious until I have a clue how this may affect my FinAid next year. </p>

<p>Might my university use the "inflated" AGI less the SS lump sum repayment to her employer (plus my summer income) as a formula, or is it not that simple? My FinAid office will say nothing until they review all documentation, although they said they re-evaluate similar FinAid scenarios and it's not unusual.</p>

<p>Does anyone have a clue how my FinAid office might re-calculate this? Thank you.</p>

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<p>Since it is not unusual and the school asked for the documentation, it sounds like they will be fair and make adjustments for it. At this point I would not worry about it.</p>

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<p>Thanks, Erin’s Dad. Since posting my question our CPA has provided us with a professional tax explanation that succinctly & specifically details the situation in layman’s terms, as well as showing what our “true” income was after the reimbursement was made. Uni FinAid said a letter from the CPA would be very beneficial. My parents will fill out a simple Uni FinAid form where there is a category for one-time lump sum 1099 payments, such as retroactive SSDI. My parents will summarize briefly that they never had use of the [reimbursed] money, and we’ll provide a copy of the 1099, the CPA’s letter, the letter requesting reimbursement, and a copy of that reimbursement check front and back. My parents are also ordering a tax transcript in advance should FinAid request that. My Uni doesn’t promise to meet all need, but they usually do for good students, which is very gracious. I also have a large merit scholarship, so it looks as though things will work out. Thanks for your help!</p>