It’s hard keeping track of what matters when in the prior-prior year world of the FAFSA and CSS Profile. Here is a table summarizing tax year and asset dates for the next few college years:
|FAFSA/ PROFILE Income Tax Year||2018||2019||2020||2021||2022||2023||2024|
|Assets As Of Oct*||2019||2020||2021||2022||2023||2024||2025|
|AOTC Tax Year**||2020, 2021||2021, 2022||2022, 2023||2023, 2024||2024, 2025||2025, 2026||2026, 2027|
To summarize based on where you are in high school:
Sophomores, this year is your first FAFSA income year. This year is your base year for EFC purposes. All future years will be compared to 2020.
Juniors (and seniors), 2020 income will also count for you for FAFSA purposes, but not until your second year of college. Families of juniors should think about what retirement contributions they can make this year and what to do with student summer job earnings to remove assets from the calculation come fall.
* Assets are as of the filing date, which may be as early as October or into the following year depending on the school’s filing date.
** Remember that the AOTC can only be claimed for four tax years, so families should decide whether the fall of freshman year is better than spring of senior year for claiming. With the income limit of $160,000 (married filing joint) or $80,000 (single), some families might not be eligible every year.
Parents may find that different strategies are needed during different years. For example, a family with a student beginning college in fall of 2022 might reduce pre-tax retirement contributions this year (to increase taxes, which are deducted from income on the FAFSA and therefore reduce EFC) and then maximize contributions beginning in 2022 to reduce AGI for AOTC claiming purposes.