Instructions for Questions 82-93 (How to complete the income tax section)

It is best to use a completed 2008 income tax return to fill out this application. However, if your parents do not have a completed income tax return, they should calculate their adjusted gross income (AGI) and taxes paid using the applicable IRS instructions. The instructions and the appropriate tax form can be obtained at a public library or downloaded in Portable Document Format (PDF) from www.irs.gov/formspubs/index.html.

When your application is compared with the tax return actually filed, the financial information must agree. If there are differences, you should correct the information using Corrections on the Web or by correcting your paper SAR and mailing it back to the FAFSA processor.

Even if your parents are not required to file a 2008 income tax return, they will need to calculate their earnings for the year. Use W-2 forms and other records to answer the questions in this section.

If an answer is zero or a question does not apply to your parents, enter 0 (zero). Do not leave any of these questions blank.

For the 2009-10 FAFSA, your parents will use 2008 tax information to answer the income tax questions. The income tax questions give 2008 Internal Revenue Service (IRS) tax form line references.

Use the information from one of the following 2008 income tax forms to complete the FAFSA in the same manner as U.S. tax information: the income tax return required by Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Marshall Islands, the Federated States of Micronesia or Palau. The amounts on these returns are already reported in U.S. dollars.

Foreign income

Income earned in a foreign country is treated in the same way as income earned in the U.S. Convert all figures to U.S. dollars, using the exchange rate in effect on the day you complete the FAFSA. Your parents can find information on current exchange rates at www.federalreserve.gov/releases/h10/update.

Your parents should also include the value of any taxes paid to the foreign government in the "U.S. income tax paid" line item. (If the income earned in the foreign country was not taxed by the central government of that country and was not subject to the foreign income exclusion based on filing an IRS Form 2555 or 2555EZ, the income should be reported as untaxed income in Question 95(i).

In many cases, if your parents file a return with the IRS for a year in which foreign income was earned, a portion of the foreign income can be excluded on IRS Form 2555 for U.S. tax purposes. The figure reported on line 45 of Form 2555 (or line 18 of Form 2555EZ) should not be reported in Question 95(i).

Questions 82-93

82. Filing return. Indicate whether your parents have already completed, are going to complete, or will not file a tax return for 2008.

83. Type of return filed. Indicate which tax form your parents filed or will file for 2008.

84. Eligible to file a 1040A or 1040EZ. Indicate your parents' eligibility to file one of these forms (even if they filed or will fill a 2008 IRS Form 1040). Answer "Yes" if your parents

• make less than $100,000,



• do not itemize deductions,



• do not receive income from their own business or farm, and



• do not receive alimony.

Also answer "Yes" if they

• filed a 1040 only to claim Hope or Lifetime Learning credits and you would have otherwise been eligible to file a 1040A or 1040EZ, or



• filed a 1040 and were not required to file a tax return

Answer "No" if they

• itemize deductions,



• are self-employed,



• receive alimony, or



• are required to file Schedule D for capital gains.

85. Dislocated Worker. As of today are either of your parents a dislocated worker?

In general, a person is considered a dislocated worker if he or she

• is receiving unemployment benefits due to being laid off or losing a job and is unlikely to return to a previous occupation;



• has been laid off or received a lay-off notice from their job;



• was self-employed but is now unemployed due to economic conditions or natural disaster; or



• is a displaced homemaker. A displaced homemaker is generally a person who: previously provided unpaid services to the family (e.g., a stay-at-home mom or dad), is no longer supported by the husband or wife, is unemployed or underemployed and is having trouble finding or upgrading employment.

If a person quits work, generally they are not considered a dislocated worker even if, for example, the person is receiving unemployment benefits.

Answer "Yes" to Question 85 if your parent is a dislocated worker.

Answer "No" to Question 85 if your parent is not a dislocated worker.

Answer "Don't Know" to Question 85 if you are not sure whether your parent is a dislocated worker.

You can contact your financial aid office for assistance in answering this question. Note that the financial aid administrator at your school may require you to provide proof that your parent is a dislocated worker if you answered "Yes" to Question 85.

86. Adjusted Gross Income. Enter your parents' adjusted gross income (AGI) for 2008. AGI is found on IRS 1040—line 37; 1040A—line 21; or 1040EZ—line 4. If your parents have not completed a 2008 tax form, they should calculate their AGI using the instructions for the applicable IRS form. They can get the instructions and the form at a public library or download them in Portable Document Format (PDF) from www.irs.gov/formspubs/index.html.

Note that AGI includes more than just wages earned; for example, it also includes interest, dividends, alimony, taxable portions of Social Security, and business income.

87. Income tax. Enter the amount of income taxes your parents paid in 2008 from IRS 1040—line 56; 1040A—line 35; or 1040EZ—line 11. They should not copy the amount of federal income tax withheld from a W-2 Form. If they did not pay any income tax for 2008, they should enter zero (0).

88. Exemptions. Enter your parents' exemptions for 2008. Exemptions are on IRS Form 1040—line 6d or 1040A—line 6d. If your parents checked the "You" or "Spouse" box on 1040EZ—line 5, they should use 1040EZ worksheet line F to determine the number of exemptions ($3,500 equals one exemption). If your parents didn’t check either box on line 5, they should enter "01" if single or "02" if married.

If your parent is divorced, separated or widowed, but he or she has filed or will file a joint tax return for 2008, he or she should give only his or her portion of the exemptions.

89. Father's/stepfather's income earned from working. Enter your father's/stepfather's 2008 income earned from work (wages, salaries, tips). The amount reported here will receive certain income allowances (deductions) from the income for necessary expenses (such as taxes and basic living costs).

90. Mother's/stepmother's income earned from working. Enter your mother's/stepmother's 2008 income earned from work (wages, salaries, tips). The amount reported here will receive certain income allowances (deductions) from the income for necessary expenses (such as taxes and basic living costs).

If your parents filed (or will file) a 2008 tax return, each should include only his or her share from IRS Form 1040—lines 7 + 12 + 18 + Box 14 of IRS Schedule K-1 (Form 1065); 1040A—line 7; 1040EZ—line 1. Even if your parents filed a joint return, they should report their earnings separately in Questions 89 and 90.

If your parents filed a tax return using other than an IRS form, such as a foreign or Puerto Rican tax form, they should report on the FAFSA the amounts (converted to U.S. dollars) from the lines of the non-IRS form that correspond most closely to those on the IRS forms.

If your parents did not file a tax return, they should report their earnings from work in 2008. They can find this information on their W-2 form(s).