(b) Untaxed income and benefits(1) The term “untaxed income and benefits” means—(A) child support received;
(B) workman’s compensation;
(C) veteran’s benefits such as death pension, dependency, and indemnity compensation, but excluding veterans’ education benefits as defined in subsection (c);
(D) interest on tax-free bonds;
(E) housing, food, and other allowances (excluding rent subsidies for low-income housing) for military, clergy, and others (including cash payments and cash value of benefits), except that the value of on-base military housing or the value of basic allowance for housing determined under section 403(b) of title 37 received by the parents, in the case of a dependent student, or the student or student’s spouse, in the case of an independent student, shall be excluded;
(F) cash support or any money paid on the student’s behalf, except, for dependent students, funds provided by the student’s parents;
(G) untaxed portion of pensions;
(H) payments to individual retirement accounts and Keogh accounts excluded from income for Federal income tax purposes; and
(I) any other untaxed income and benefits, such as Black Lung Benefits, Refugee Assistance, or railroad retirement benefits, or benefits received through participation in employment and training activities under title I of the Workforce Innovation and Opportunity Act [29 U.S.C. 3111 et seq.]. (2) The term “untaxed income and benefits” shall not include—(A) the amount of additional child tax credit claimed for Federal income tax purposes;
(B) welfare benefits, including assistance under a State program funded under part A of title IV of the Social Security Act [42 U.S.C. 601 et seq.] and aid to dependent children; (C) the amount of earned income credit claimed for Federal income tax purposes;
(D) the amount of credit for Federal tax on special fuels claimed for Federal income tax purposes;
(E) the amount of foreign income excluded for purposes of Federal income taxes; or
(F) untaxed social security benefits.
(c) Veteran and veterans’ education benefits(1) The term “veteran” means any individual who—(A) has engaged in the active duty in the United States Army, Navy, Air Force, Marines, or Coast Guard; and
(B) was released under a condition other than dishonorable.
(2) The term “veterans’ education benefits” means veterans’ benefits the student will receive during the award year, including but not limited to benefits under the following provisions of law:(A) Chapter 103 of title 10 (Senior Reserve Officers’ Training Corps).
(B) Chapter 106A of title 10 (Educational Assistance for Persons Enlisting for Active Duty).
(C) Chapter 1606 of title 10 (Selected Reserve Educational Assistance Program).
(D) Chapter 1607 of title 10 (Educational Assistance Program for Reserve Component Members Supporting Contingency Operations and Certain Other Operations).
(E) Chapter 30 of title 38 (All-Volunteer Force Educational Assistance Program, also known as the “Montgomery GI Bill—active duty”).
(F) Chapter 31 of title 38 (Training and Rehabilitation for Veterans with Service-Connected Disabilities).
(G) Chapter 32 of title 38 (Post-Vietnam Era Veterans’ Educational Assistance Program).
(H) Chapter 33 of title 38 (Post-9/11 Educational Assistance).
(I) Chapter 35 of title 38 (Survivors’ and Dependents’ Educational Assistance Program).
(J) Section 903 of the Department of Defense Authorization Act, 1981 (10 U.S.C. 2141 note) (Educational Assistance Pilot Program). (K) Section 156(b) of the “Joint Resolution making further continuing appropriations and providing for productive employment for the fiscal year 1983, and for other purposes” (42 U.S.C. 402 note) (Restored Entitlement Program for Survivors, also known as “Quayle benefits”). (L) The provisions of chapter 3 of title 37, related to subsistence allowances for members of the Reserve Officers Training Corps.
(f) Assets(1) The term “assets” means cash on hand, including the amount in checking and savings accounts, time deposits, money market funds, trusts, stocks, bonds, other securities, mutual funds, tax shelters, qualified education benefits (except as provided in paragraph (3)), and the net value of real estate, income producing property, and business and farm assets.
(2) With respect to determinations of need under this subchapter, other than for subpart 4 of part A of this subchapter, the term “assets” shall not include the net value of—(A) the family’s principal place of residence;
(B) a family farm on which the family resides; or
(C) a small business with not more than 100 full-time or full-time equivalent employees (or any part of such a small business) that is owned and controlled by the family.
(3) A qualified education benefit shall be considered an asset of—(A) the student if the student is an independent student; or
(B) the parent if the student is a dependent student, regardless of whether the owner of the account is the student or the parent.
(4) In determining the value of assets in a determination of need under this subchapter (other than for subpart 4 of part A of this subchapter), the value of a qualified education benefit shall be—(A) the refund value of any tuition credits or certificates purchased under a qualified education benefit; and
(B) in the case of a program in which contributions are made to an account that is established for the purpose of meeting the qualified higher education expenses of the designated beneficiary of the account, the current balance of such account.
(5) In this subsection:(A) The term “qualified education benefit” means—(i) a qualified tuition program (as defined in section 529(b)(1)(A) of title 26) or other prepaid tuition plan offered by a State; and
(ii) a Coverdell education savings account (as defined in section 530(b)(1) of title 26).
(B) The term “qualified higher education expenses” has the meaning given the term in section 529(e) of title 26.
(h) Treatment of income taxes paid to other jurisdictions(1) The tax on income paid to the Governments of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau under the laws applicable to those jurisdictions, or the comparable tax paid to the central government of a foreign country, shall be treated as Federal income taxes.
(2) References in this part to title 26, Federal income tax forms, and the Internal Revenue Service shall, for purposes of the tax described in paragraph (1), be treated as references to the corresponding laws, tax forms, and tax collection agencies of those jurisdictions, respectively, subject to such adjustments as the Secretary may provide by regulation.
(j) Other financial assistance(1) For purposes of determining a student’s eligibility for funds under this subchapter, estimated financial assistance not received under this subchapter shall include all scholarships, grants, loans, or other assistance known to the institution at the time the determination of the student’s need is made, including national service educational awards or post-service benefits under title I of the National and Community Service Act of 1990 (42 U.S.C. 12511 et seq.), but excluding veterans’ education benefits as defined in subsection (c). (2) Notwithstanding paragraph (1), a tax credit taken under section 25A of title 26, or a distribution that is not includable in gross income under section 529 of such title, under another prepaid tuition plan offered by a State, or under a Coverdell education savings account under section 530 of such title, shall not be treated as estimated financial assistance for purposes of section 1087kk(3) of this title.
(3) Notwithstanding paragraph (1) and section 1087ll of this title, assistance not received under this subchapter may be excluded from both estimated financial assistance and cost of attendance, if that assistance is provided by a State and is designated by such State to offset a specific component of the cost of attendance. If that assistance is excluded from either estimated financial assistance or cost of attendance, it shall be excluded from both.
(4) Notwithstanding paragraph (1), special combat pay shall not be treated as estimated financial assistance for purposes of section 1087kk(3) of this title.
(Pub. L. 89–329, title IV, § 480, as added Pub. L. 99–498, title IV, § 406(a), Oct. 17, 1986, 100 Stat. 1472; amended Pub. L. 100–50, § 14(28), June 3, 1987, 101 Stat. 353; Pub. L. 100–369, § 7(b), July 18, 1988, 102 Stat. 837; Pub. L. 101–610, title I, § 185(3), (4), Nov. 16, 1990, 104 Stat. 3168; Pub. L. 102–325, title IV, § 471(a), July 23, 1992, 106 Stat. 606; Pub. L. 103–82, title I, § 102(c)(4), (5), Sept. 21, 1993, 107 Stat. 824; Pub. L. 103–208, § 2(g)(17)–(20), Dec. 20, 1993, 107 Stat. 2474; Pub. L. 104–193, title I, § 110(h)(2), Aug. 22, 1996, 110 Stat. 2172; Pub. L. 105–78, title VI, § 609(j), (k), Nov. 13, 1997, 111 Stat. 1524; Pub. L. 105–244, title IV, § 479, Oct. 7, 1998, 112 Stat. 1732; Pub. L. 105–277, div. A, § 101(f) [title VIII, § 405(d)(15)(B), (f)(12)(B)], Oct. 21, 1998, 112 Stat. 2681–337, 2681–421, 2681–431; Pub. L. 109–171, title VIII, § 8019, Feb. 8, 2006, 120 Stat. 176; Pub. L. 110–84, title VI, § 604(a), Sept. 27, 2007, 121 Stat. 806; Pub. L. 110–153, § 1(a), Dec. 21, 2007, 121 Stat. 1824; Pub. L. 110–315, title IV, § 473(a)–(e), Aug. 14, 2008, 122 Stat. 3270, 3271; Pub. L. 111–39, title IV, § 406(a)(6)–(8), July 1, 2009, 123 Stat. 1949, 1950; Pub. L. 113–128, title V, § 512(n)(4), July 22, 2014, 128 Stat. 1710; Pub. L. 116–260, div. FF, title VII, § 702(l)(2), Dec. 27, 2020, 134 Stat. 3163.)