PUBLIC LAW 99-498—OCT. 17, 1986
100 STAT. 1325
"(7) Effective family income shall be determined on the basis Taxes. of the annual adjusted family income minus the Federal taxes and imputed State and other taxes paid or payable for the year that adjusted gross income is used in the calculation of the student's Pell Grant. "(8)(A) The employment expense offset is determined as follows: 1 "(i) If both parents were employed in the year for which their income is reported and both have their incomes re•••' ported in determining the expected family contribution, such offset is equal to the lesser of $1,500 or 50 percent of the earned income (income earned by work) of the parent with the lesser earned income. "(ii) If a parent qualifies as a head of household as • defined in section 2 of the Internal Revenue Code of 1954, 26 USC 2. such offset is equal to the lesser of $1,500 or 50 percent of the parent's earned income. "(B) 'The employment expense offset in the case of an i independent student with dependents is determined as follows: "(i) If both the student and the student's spouse were employed in the year for which their income is reported and both have their incomes reported in determining the ii expected family contribution, such offset is equal to the lesser of $1,500 or 50 percent of the earned income (income earned by work) of the spouse with the lesser earned ' • income. I'cii "(ii) If a student qualifies as a head of household as defined in section 2 of the Internal Revenue Code of 1954, such offset is equal to the lesser of $1,500 or 50 percent of the student's earned income. "(9)(A) The term 'excludable income' means the income dec scribed in subparagraphs (B), (C), and (D) of this paragraph which is excluded for the purpose of determining 'annual adj justed family income' under paragraph (1). "(B) For a Native American student, the annual adjusted Indians, family income does not include the income received by the student, the student's spouse, or the student's parents under the Distribution of Judgment Funds Act (25 U.S.C. 1401, et seq.), the Alaska Native Claims Settlement Act (43 U.S.C. 1601, et seq.), or the Maine Indians Claims Settlement Act (25 U.S.C. 1721, et seq.). "(C) In the case of a student who is divorced or separated, or whose spouse has died, the spouse's income shall not be considered in determining the effective family income. "(D) The annual adjusted family income does not include any I student financial assistance except veterans' or Social Security benefits set forth in paragraph (15) of this subsection. "(lOXA) In determining family size in the case of a dependent student— "(i) if the parents are not divorced or separated, family members include the student's parents, and the dependents of the student's parents including the student; > "(ii) if the parents are divorced or separated, family members include the parent whose income is included in computing the effective family income and that parent's
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dependents, including the student; and
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