2 Session Outline Review of Updated Verification Rules Review of IRS Data Retrieval ProcessReview of IRS Tax TranscriptsQ&A
3 IRS Publications IRS Publication 17 – Your Federal Income Tax IRS Publication 970 – Tax Benefits for EducationIRS Publication 3 – Armed Forces Tax Guide
4 2012-13 Verification Requirements Changes outlined in DCL Gen – 201130% verification cap eliminatedAGI, Taxes Paid, certain untaxed income - considered verified through IRS data retrieval process if no changes madeAll families who qualify are encouraged to use IRS data retrievalIneligible families and those that refuse are required to provide:IRS Tax Return Transcripts and/orCopies of Foreign Tax Returns
5 Ineligible for IRS Data Retrieval Filed a Foreign tax returnMarried filing separatelyChange in marital status after 12/31/XX
6 IRS Data Retrieval - 1 Primary method used by families to verify AGI, Tax-Exempt Interest IncomeTaxes Paid,Education/First Time Home Buyer CreditsIRA/Pension - Untaxed Income
7 IRS Data Retrieval - 2Families not eligible or did not use IRS Data Retrieval & selected for verification must submit:IRS Tax Return Transcript and/orCopy of foreign tax return and/orIn “rare” cases a paper copy of US tax return
8 IRS Data Retrieval -3Must list first name shown on IRS tax return filedMust use EXACT address shown on corresponding tax returnDept of ED and IRS working to make the process more “user friendly”
9 IRS Data Retrieval – 4 Does Not import “earned income” Automatically adds 15a-15b and 16a-16b as untaxed incomeDoes not add line 25
10 Multiple IRSDT’s?Currently the IRS data on a tax return may only be imported into ONE FAFSA per award year. This causes issues when:Parent of dependent student is also a studentStudent has siblings who are also filing a FAFSA
11 IRS Data Retrieval Codes 02 – The only code that is valid for verificationCorrecting rollovers on lines 15 or 16 will trigger a change from 02 and require a tax transcriptAdding “earned income” data will not change the code from 02.
12 IRS Tax Transcripts Provided by the IRS free of charge Available for processing by IRS:2-3 weeks after filing for E-filed returns6-8 weeks after filing for paper filed returnsTranscript should arrive within 5-10 business days after it is available for processing
13 Types of tax transcripts Tax Return Transcript – reports what was on ORIGINAL tax return (online & phone)Tax Account Transcript – reports changed data from 1040X or additional 1040 and SOME of the original data. (online & phone)Record of Account – reports all of the original and changed data (4506-T-EZ or 4506)
14 Ways to obtain Transcripts How to obtain a tax transcript:Online – PREFERREDPhone – AcceptableMail – Acceptable but SLOWIRS Office Walk-In – Frowned Upon
15 Unpaid TaxesParent student E-filed – but transcript NOT available. Possible cause:Federal Tax returns filed before the filing deadline with an unpaid balance due are not “processed” by the IRS until the earlier of:the filing deadline has passed ( ) orthe tax has been paid
16 IRS Transcript URL IRS URL for Transcripts: Must provide: https://sa2.www4.irs.gov/irfof-tra/start.doMust provide:SSN or ITINDate of BirthEXACT Street Address as used on tax returnPostal Zip Code
39 Amended Tax ReturnWhen a 1040X is filed the family will need to provide:Tax Return Transcript &Tax Account TranscriptORRecord of Account – available only with filing of T (up to 30 days to receive)
40 Resources NASFAA – Using Federal Tax Returns in Needs Analysis: Good explanation of 2011 Tax forms, Verification procedures & Tax Return Transcript DecoderUSAFUNDS – Excellent explanation of Verification, 2011 Tax forms and Tax Return Transcript Decoder.
41 Be Calm 2012-13 is a transition year Dept of ED, IRS, Schools all working together to streamline and simplify verification.should be much more automated and most of the wrinkles should have been ironed out.
42 Questions?NCASFAA and Jim Briggs thank you for your participation.