One-Time Taxable Income
Background
The federal needs analysis formulas assume that prior year income is a reliable indicator of current year income. There are times when a portion of the family’s income is one-time income, and is therefore, not representative of the family’s annual recurring income. Examples of onetime income include:
- Capital gains
- Bonus income
- Gambling or prize earnings
- Early distribution of IRA or retirement plan income
- Conversion of traditional IRA to Roth IRA
- Employer reimbursement for moving expenses
- Insurance settlements
Documentation
Families who file a request for reconsideration due to the inclusion of one-tme income on the FAFSA will generally need to supply the following documentation to the Office of Scholarships and Financial Aid:
- Further explanation / documentation of the income in question;
- Documentation from the source that this is really one-time income (e.g., moving expense reimbursement from the employer)
- Documentation of expenses related to the acquisition and /or use of the one-time income (for example, medical expenses related to insurance reimbursement)
Updated November 19, 2009
