Located the information below on fastweb regarding how the situation should be handled for completing FAFSA.
If the parents are separated, only the income and assets of the custodial parent are reported on the FAFSA, regardless of the tax filing status of the parents. If the custodial parent files a return with a status of married filing separately, identifying her adjusted gross income (AGI) from the income tax return is easy. On the other hand, if the parents filed a joint return, the custodial parent must calculate her income and taxes paid using information from the joint return and the relevant IRS W-2 and 1099 forms. The income calculation is based on the income from the custodial parent’s W-2 forms, plus half of the income (or losses) from joint accounts and investments.
There are two approaches to calculating the taxes paid attributable to the custodial parent from a joint return. The preferred method is to use the IRS Tax Table or Tax Rate Schedule to calculate the amount that would have been paid if a separate return had been filed, assuming the appropriate deduction and number of exemptions. The other method involves a proportional distribution of the taxes paid on the joint return based on the custodial parent’s share of the joint AGI.
https://www.fastweb.com/financial-aid/articles/how-do-you-calculate-individual-income-from-a-joint-r...
