; (B) in the case of an individual who filed a Federal form 1040EZ, 1040A, or 1040 with no forms or schedules, adjusted gross income plus untaxed income and benefits for the second preceding tax year minus excludable income (as defined in subsection (e)); and (C) in the case of an individual who filed a Federal form 1040 with forms or schedules or in the case of an individual who filed a foreign tax return in lieu of a Federal tax return, adjusted gross income plus untaxed income and benefits for the second preceding fiscal tax year minus excludable income (as defined in subsection (e)). . (b) Conforming amendment Section 480(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087vv(a) ) is amended— (1) by moving paragraph (2) two ems to the right; and (2) in paragraph (2), by striking No portion and inserting the following: Amounts not included .—No portion . (c) Untaxed income and benefits Section 480(b) of the Higher Education Act of 1965 ( 20 U.S.C. 1087vv(b) ) is amended to read as follows: (b) Untaxed income and benefits The term untaxed income and benefits means— (1) the aggregate amount of losses taken into account for determining adjusted gross income on Federal form 1040; (2) the amount of any tax-exempt interest income reported on Federal form 1040; and (3) amounts of foreign income excluded from adjusted gross income and reported on Federal form 2555. . (d) Excludable income Section 480(e) of the Higher Education Act of 1965 ( 20 U.S.C. 1087vv(e) ) is amended to read as follows: (e) The term excludable income means— (1) any student financial assistance awarded based on need as determined in accordance with the provisions of this part, including any income earned from work under part C of this title