Income earned from work on the FAFSA is your 2024 wages, salaries, tips, and net self-employment earnings, calculated with a single formula: IRS Form 1040, Line 1z, plus Schedule 1, Lines 3 and 6.1Federal Student Aid. Filling Out the FAFSA Form The 2026–2027 FAFSA pulls from your 2024 federal return, not the most recent year filed.2Federal Student Aid. 2026-27 FAFSA Form The student reports their own figure, and each contributing parent reports theirs separately, so a married couple filing jointly still has to split the number by who earned what.
Most applicants won’t type this number in. Since the 2024–2025 cycle, the IRS Direct Data Exchange transfers the figure automatically once you consent on the form.1Federal Student Aid. Filling Out the FAFSA Form You still need to know the formula so you can check the transferred number and handle the situations that require manual entry.
The Formula, Line by Line
Pull your 2024 Form 1040 and add three numbers:
- Form 1040, Line 1z — total wage-related income (sub-lines 1a through 1h combined).
- Schedule 1, Line 3 — net business profit or loss from Schedule C.
- Schedule 1, Line 6 — net farm profit or loss from Schedule F.3Internal Revenue Service. 2025 Schedule 1 (Form 1040) – Additional Income and Adjustments to Income
That total is your income earned from work.
What Line 1z Actually Includes
Line 1z is a sum of eight sub-lines, each capturing a different form of compensation:4Internal Revenue Service. Form 1040, U.S. Individual Income Tax Return
- Line 1a: wages, salaries, and tips from every W-2, Box 1.
- Line 1b: household employee wages not reported on a W-2.
- Line 1c: tip income not on Line 1a, including allocated tips from W-2 Box 8.
- Line 1d: Medicaid waiver payments you elect to treat as wages.
- Line 1e: taxable dependent care benefits.
- Line 1f: employer-provided adoption benefits.
- Line 1g: wages from Form 8919, for workers whose employer didn’t withhold Social Security and Medicare taxes.
- Line 1h: other earned income, such as strike pay or certain disability wages.
Line 1i, nontaxable combat pay, is not part of the Line 1z total.4Internal Revenue Service. Form 1040, U.S. Individual Income Tax Return Combat pay gets separate treatment on the FAFSA, covered below.
Business and Farm Income
Schedule 1 numbers are net figures, already reduced by legitimate business expenses. A business or farm that lost money in 2024 shows a negative value, and that negative flows into the formula and reduces your total. The overall income earned from work figure cannot drop below zero, though. If your losses wipe out your wages, report zero rather than a negative number.
One boundary to know: income from partnerships or S corporations reported on Schedule K-1 does not flow through Schedule 1, Lines 3 or 6. It’s part of your adjusted gross income but not part of income earned from work. The FAFSA captures it through other fields.
If You Didn’t File a Return
No 2024 Form 1040 to work from? Use your W-2s. Add Box 1 (taxable wages) and Box 8 (allocated tips) from every W-2 you received for 2024.5Internal Revenue Service. Instructions for Form 1040 and 1040-SR That combined total is your income earned from work. If you’ve lost a W-2, request a copy from the employer or order a Wage and Income Transcript from the IRS.
Special Situations
Combat Pay
Nontaxable combat pay doesn’t appear in Line 1z, but the Department of Education still wants it counted. Include the full amount of any combat-zone pay that was excluded from taxable income in your income earned from work figure so that the payroll-tax allowance in the aid formula is calculated correctly.6Federal Student Aid. Responses to Recent, Recurring Federal Student Aid Questions When the IRS transfers your data automatically, check that combat pay wasn’t left out.
Federal Work-Study
Federal work-study wages show up on your W-2 and are part of your taxable income, so they belong in Line 1z and in your reported income earned from work. The FAFSA’s aid formula then excludes those earnings when calculating next year’s eligibility, so a work-study job doesn’t reduce future aid.7Federal Student Aid. 8 Things You Should Know About Federal Work-Study
Foreign Tax Returns
If you filed a foreign return rather than a U.S. one, use the equivalent lines on that form for wages and business income, and convert everything to U.S. dollars using the Federal Reserve exchange rate for the date closest to when you completed the FAFSA. If you worked for an international organization such as the United Nations or the World Bank and weren’t required to file any return, answer “No” to filing a 1040 and “Yes” to working for an international organization, then enter the portion of your adjusted gross income that came from working.8Federal Student Aid. How Do I Fill Out the FAFSA Form Using a Non-U.S. Tax Return?
Clergy Housing Allowances
A minister’s housing or parsonage allowance is excluded from gross income for income tax purposes but is still subject to self-employment tax.9Internal Revenue Service. Ministers’ Compensation and Housing Allowance Because it isn’t in taxable wages, Line 1z won’t capture it. The FAFSA treats it as untaxed income and asks for it in a separate section, not in income earned from work.
What Doesn’t Belong in This Field
The FAFSA draws a clean line between money you worked for and money that arrived through other channels. These common income sources do not go in income earned from work:
- Interest and dividends from savings accounts, bonds, or stock portfolios.
- Capital gains from selling stocks, real estate, or other assets.
- Unemployment compensation.
- Social Security retirement or disability benefits.
- Alimony and child support.
- Retirement distributions from IRAs or pension plans.
Some of these amounts have their own fields elsewhere on the FAFSA. The point is to keep them out of the income earned from work box specifically.
Pre-Tax Retirement Contributions Don’t Reduce the Figure
If your employer deducts 401(k) contributions from your paycheck, that does not lower your income earned from work. Line 1z on Form 1040 reflects your wages before those pre-tax deductions, so the full amount stays in the FAFSA formula.
Tax-deferred contributions are tracked separately. Amounts reported on your W-2 in Box 12 under codes D, E, F, G, H, and S go into the “payments to tax-deferred pension and retirement savings plans” line on the FAFSA, and self-employed contributions come from Schedule 1, Lines 16 and 20.2Federal Student Aid. 2026-27 FAFSA Form Those figures matter for the aid calculation, but they belong in a different field.
Verification and Getting It Wrong
Schools can select any FAFSA for verification, either at random or as a matter of policy for every applicant, and ask for documentation proving what you reported.10Federal Student Aid. How To Review and Correct Your FAFSA Form If your income earned from work doesn’t match IRS records, your aid package will be delayed while the school reconciles the difference.
The automatic data transfer has cut down on mismatches, but manual entries and special situations still create them. Honest mistakes get fixed with a correction and supporting documents. Intentionally falsifying information on the FAFSA carries a fine of up to $20,000, up to five years in prison, or both.11GovInfo. U.S.C. Title 20 – 1097. Criminal Penalties When you’re unsure, copy the exact figures from your tax return rather than estimating.