The online application automatically presents Worksheet questions as appropriate. If you are completing a paper form, complete the left-hand column on page 5 labeled "Student/Spouse."

Question 41 - Worksheet B

Payments to tax-deferred pension and savings plans. You must report money paid into tax-sheltered or deferred annuities (whether paid directly or withheld from earnings), including—but not limited to—amounts reported on the W-2 Form, in Boxes 12a through 12d, codes D, E, F, G, H and S. You must include untaxed portions of 401(k) and 403(b) plans. Note that employer contributions to tax-deferred pension and savings plans should not be reported on the FAFSA as an untaxed benefit.

IRA and other plans. Enter the amount of IRA deductions and payments to self-employed Simplified Employee Pension (SEP), Savings Incentive Match Plan for Employees (SIMPLE) and Keogh and other qualified plans. These plan payments can be found on IRS 1040—total of lines 28 + 32 or 1040A—line 17.

Child support received. Report child support you received for all children during 2007. Do not include foster care or adoption payments.

Tax-exempt interest income. Enter the total amount of tax-exempt interest income you (and your spouse) earned in 2007, as reported on Form 1040—line 8b or 1040A—line 8b.

Foreign income exclusion. The IRS allows eligible U.S. citizens and residents living in foreign countries to exclude a limited amount of income earned abroad. Though deducted for tax purposes, this amount is considered untaxed income for federal student aid purposes. Provide the amount of the foreign income exclusion you (and your spouse) reported for 2007 from Form 2555—line 45 or 2555EZ—line 18.

Untaxed portions of IRA distributions. This amount can be calculated from IRS Form 1040 (line 15a minus 15b) or 1040A (line 11a minus 11b). If the result is a negative number, enter a zero here.

Untaxed portions of pensions. This amount can be calculated from IRS Form 1040 (line 16a minus 16b) or 1040A (line 12a minus 12b). If the result is a negative number, enter a zero here.

The only exception to reporting IRA or pension distributions as income is when these distributions are rolled over to another IRA or retirement plan within 60 days following the day on which you receive the distribution from the initial IRA or retirement plan.

Special fuels credit. Enter the total amount of credit for federal tax on special fuels that you (and your spouse) reported in 2007, from IRS Form 4136—line 18 (nonfarmers only).

Housing, food and other living allowances. Housing, food and other living allowances provided to you or your spouse must be reported. These allowances must be reported when they are part of a compensation package that some people, particularly clergy and military personnel, receive for their jobs. Include cash payments and cash value of benefits. If you received free room and board in 2007 for a job that was not awarded as federal student aid, you must report the value of the room and board as untaxed income. (This category, "housing allowances," excludes rent subsidies for low-income housing.)

Veterans' noneducation benefits. Enter the total amount of veterans' noneducation benefits you received in 2007. Include Disability, Death Pension, Dependency and Indemnity Compensation (DIC) and/or VA Educational Work-Study allowances.

Other untaxed income and benefits. Include untaxed income or benefits not reported elsewhere on Worksheets A and B such as worker's compensation, untaxed portions of railroad retirement benefits, untaxed portion of capital gains, Black Lung Benefits, Refugee Assistance, disability, foreign income that wasn't taxed by any government, etc. For students (and their spouses) whose W-2 Forms show combat pay, any untaxed portion of that pay must be reported on Worksheet B and the full amount must be reported as income earned from work. Do not include benefits from flexible spending arrangements (e.g., cafeteria plans), student aid or Workforce Investment Act (WIA) educational benefits.

Money received. Report any cash support you receive from a friend or relative (other than your parents, if you are a dependent student). Cash support includes payments made on your behalf. For instance, if your aunt pays your rent or utility bill that you would otherwise be obligated to pay yourself, you must report those payments on Worksheet B.

Certain income and benefits should not be reported on Worksheets A and B:

• Combat pay for non-tax filers. Students (and their spouses) who did not file a tax return must report any combat pay received as income earned from work in Question 38 or 39. None of it should be reported on Worksheet B. This is because income earned from work is used in place of adjusted gross income (AGI) for non-tax filers, so putting combat pay on Worksheet B in this case would yield a double counting of funds.
• Student financial aid. Student aid received is already taken into account when a school packages your aid. However, work-study earnings must be reported as taxed income in the income questions of the Student's Income and Assets section and then excluded (on Worksheet C).
• Food stamps and other programs. Benefits received from federal, state or local governments from the following programs are not counted as untaxed income: the Food Stamp Program; Special Supplemental Nutrition Program for Women, Infants and Children (WIC); Food Distribution Program; Commodity Supplemental Food Program; National School Lunch and School Breakfast Programs; Summer Food Service Program; and Special Milk Program for Children.
• Dependent Assistance. You may be eligible to exclude a limited amount of benefits received for dependent care assistance if certain requirements are met. Generally, up to $5,000 of benefits may be excluded from an employee's gross income or $2,500 for a married employee who files a separate return from his or her spouse. This exclusion cannot exceed the employee's (or his or her spouse's) earned income. (Note: Some states provide reimbursement for childcare expenses incurred by welfare recipients through Temporary Assistance for Needy Families [TANF]. You must report this on the application because you bill the state for the amount of childcare costs incurred while on welfare and are reimbursed on that basis.)
• Per capita payments to Native Americans. You should not report individual per capita payments received in 2007 from the Per Capita Act or the Distribution of Judgment Funds Act unless any individual payment exceeds $2,000. Thus, if an individual payment were $1,500, you would not report it on your application. However, if a payment were $2,500, you would report the amount that exceeds $2,000: $500.
• Heating/fuel assistance. Exclude from consideration as income or resources any payments or allowances received under the Low-Income Home Energy Assistance Program (LIHEAP). (Note: Payments under the LIHEAP are made through state programs that may have different names.)