<p>Next January I'll be filling out the FAFSA for the first time and I'm trying to familiarize myself with financial aid in general.</p>
<p>For colleges, what determines a family's annual income? Is it their net income or the "adjusted gross" on the tax return? I'm looking at a chart right now comparing estimated financial aid awards between schools and there's a chart with family income, but no explanation whether it's net or adjusted gross.</p>
<p>Thank you.</p>
<p>The AGI on the federal tax form, plus the amount contributed to a 401K is added on, and the amount of federal tax paid is used in the calculation.</p>
<p>You should be able to print out a FAFSA worksheet. That worksheet has very clear directions on what to put in each spot. For things like income etc...it tells you exactly what line from the tax return the info is on. </p>
<p>You do have to be a bit careful when you do your estimated FAFSA in January as the number lines do change a bit from year to year on the tax forms. But the info is very clear.</p>
<p>Included in your AGI will be income earned plus dividends and interest, self employed income, etc.</p>
<p>In addition to the above any untaxed income and benefits are included as income. So AGI + add back any pre AGI deductions for IRA/401k contributions + add any untaxed income (such as Social Security income, child support etc).</p>