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Lisanne Masterson Director, Financial Aid Blue Ridge Community College.

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Presentation on theme: "Lisanne Masterson Director, Financial Aid Blue Ridge Community College."— Presentation transcript:

1 Lisanne Masterson Director, Financial Aid Blue Ridge Community College

2 AGENDA Who Should File? Verification Items on Tax Transcript Other Items on Tax Transcript to Check Issues

3 Resources FAFSA Verification – IRS Tax Return Transcript Matrix ( IRS Publications 17 501 (Exemptions, Standard Deduction & Filing Information) 519 (Non-residents)

4 Who Should File? Filing StatusAge at end of 2013Must file if gross income at least… SingleUnder 65$10,000 65 or older$11,500 Head of HouseholdUnder 65$12,500 65 or older$14,350 Married Filing JointlyUnder 65 (both spouses)$20,000 65 or older (one spouse)$21,200 65 or older (both spouses)$22,400 Married Filing SeparatelyAny age$3,900 Qualifying Widow(er) with Dependent Child Under 65$16,100 65 or older$17,300

5 Who Should File? Self-Employed Persons Required to file if net earnings (excluding church employee income) are $400 or more.

6 Verification – Tax Return Transcript Matrix Item to Verify FAFSA Q# ISIR Field 2013 Tax Transcript Item1040 Line 1040A Line 1040EZ Line AGI36 & 8543 & 108AGI Per Computer37214 Tax Paid37 & 8644 & 109For 1040s: -Income Tax After Credits Per Computer For 1040As: -Total Tax Liability TP Figures Per Computer For 1040EZs: - Total Tax Liability TP Figures Per Computer 553510 Ed Credits44a & 93a51 & 116Education Credit Per Computer4931NA IRA Deductions 45b & 94b58 & 123KEOGH/SEP Contribution Deduction + IRA Deduction Per Computer 28 + 3217NA Tax Exempt Interest Inc 45d & 94d60 & 125Tax-Exempt Interest8b NA Untaxed IRA45e & 94e61 & 126Total IRA Distribution – Taxable IRA Distribution 15a – 15b11a – 11bNA Untaxed Pensions 45f & 94f62 & 127Total Pensions & Annuities – Taxable Pensions & Annuities Amount 16a – 16b12a – 12bNA

7 Use Tax Transcript as Required Verification Document Adjusted Gross Income US Income Tax Paid Untaxed Income Untaxed pensions Untaxed IRS distribution Tax Exempt Interest Income Education Credits

8 What Else? Tax Form Used Tax Filing Status Wages Business Income Details

9 W-2 Forms If you have them to verify wages, you must also review untaxed income items in box 12

10 Tax Mismatch Comments Not necessarily selected for Verification Occurs when marital status, tax filing status, and wages do not match MUST resolve

11 Filing Status vs Marital Status Single - Single Married Filing Jointly – Married – Separated/Divorced Married Filing Separately – Married – Separated/Divorced Head of Household – Married – Separated/Divorced

12 Married & Filing Separately Separated & Filing Jointly Married & Filing Separately Cannot use IRS Data Retrieval IRS Tax Transcripts for each and add the respective line items Separated & Filing Jointly Use Tax Transcript to ‘separate’ out items for each based on W-2s, Business Income Statements etc. Utilize institutional policy on how you ‘re-create’ a new Tax Return for joint items & tax paid.

13 Head of Household Unmarried or ‘considered unmarried’ Maintain over 50% costs of primary home Must have a qualifying dependent that lived with you more than 50% of the year Refer to IRS Publication 501 for details CAN be Head of Household if you have a nonresident alien spouse at any time during the year

14 Considered Unmarried On last day of the year, you meet ALL of the following: – File separate return – Paid 50+% costs for maintaining home – Spouse did not live in your home for the last 6 months of the year – Your home was main home for your qualifying dependent – You must claim qualifying dependent as an exemption*

15 When You Have Questions Considered Conflicting Information 34 CFR 668.54(a)(2) “If an institution has reason to believe that an applicant’s FAFSA information is inaccurate, it must verify the accuracy of that information.”

16 When You Have Questions FSA Handbook, AVG – Discrepant Tax Data – “We have already stated that financial aid administrators to not need to be tax experts, yet there are some issues that even a layperson with basic tax law information can evaluate. Because conflicting data often involve such information, FAAs must have a fundamental understanding of relevant tax issues that can considerably affect the need analysis.” – You are obligated to know: Whether a person is required to file What the correct filing status for a person should be, and That an individual cannot be claimed as an exemption by more than one person.

17 Resolving Issues Not All Tax Preparers Are Correct YOU are responsible for ensuring you resolve conflicting data Request Amended Tax Return Surprise….amended returns sometimes work in the student’s favor!

18 Questions

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