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Jim Briggs The Tax Detective.  Review of Updated Verification Rules  Review of IRS Data Retrieval Process  Review of IRS Tax Transcripts  Q&A.

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Presentation on theme: "Jim Briggs The Tax Detective.  Review of Updated Verification Rules  Review of IRS Data Retrieval Process  Review of IRS Tax Transcripts  Q&A."— Presentation transcript:

1 Jim Briggs The Tax Detective

2  Review of Updated Verification Rules  Review of IRS Data Retrieval Process  Review of IRS Tax Transcripts  Q&A

3  IRS Publication 17 – Your Federal Income Tax  IRS Publication 970 – Tax Benefits for Education  IRS Publication 3 – Armed Forces Tax Guide

4  Changes outlined in DCL Gen – 2011 ◦ 30% verification cap eliminated ◦ AGI, Taxes Paid, certain untaxed income - considered verified through IRS data retrieval process if no changes made ◦ All families who qualify are encouraged to use IRS data retrieval ◦ Ineligible families and those that refuse are required to provide:  IRS Tax Return Transcripts and/or  Copies of Foreign Tax Returns

5  Filed a Foreign tax return  Married filing separately  Change in marital status after 12/31/XX

6  Primary method used by families to verify ◦ AGI, ◦ Tax-Exempt Interest Income ◦ Taxes Paid, ◦ Education/First Time Home Buyer Credits ◦ IRA/Pension - Untaxed Income

7  Families not eligible or did not use IRS Data Retrieval & selected for verification must submit: ◦ IRS Tax Return Transcript and/or ◦ Copy of foreign tax return and/or ◦ In “rare” cases a paper copy of US tax return

8  Must list first name shown on IRS tax return filed  Must use EXACT address shown on corresponding tax return  Dept of ED and IRS working to make the process more “user friendly”

9  Does Not import “earned income”  Automatically adds 15a-15b and 16a-16b as untaxed income  Does not add line 25

10  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 student ◦ Student has siblings who are also filing a FAFSA

11  02 – The only code that is valid for verification  Correcting rollovers on lines 15 or 16 will trigger a change from 02 and require a tax transcript  Adding “earned income” data will not change the code from 02.

12  Provided by the IRS free of charge  Available for processing by IRS: ◦ 2-3 weeks after filing for E-filed returns ◦ 6-8 weeks after filing for paper filed returns  Transcript should arrive within 5-10 business days after it is available for processing

13  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  How to obtain a tax transcript: ◦ Online – PREFERRED ◦ Phone – Acceptable ◦ Mail – Acceptable but SLOW ◦ IRS Office Walk-In – Frowned Upon

15  Parent 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 ( ) or ◦ the tax has been paid

16  IRS URL for Transcripts: ◦ https://sa2.www4.irs.gov/irfof-tra/start.do https://sa2.www4.irs.gov/irfof-tra/start.do  Must provide: ◦ SSN or ITIN ◦ Date of Birth ◦ EXACT Street Address as used on tax return ◦ Postal Zip Code

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39  When a 1040X is filed the family will need to provide: ◦ Tax Return Transcript & ◦ Tax Account Transcript ◦ OR ◦ Record of Account – available only with filing of 4506-T (up to 30 days to receive)

40  NASFAA – Using Federal Tax Returns in Needs Analysis: ◦ Good explanation of 2011 Tax forms, Verification procedures & Tax Return Transcript Decoder  USAFUNDS – Excellent explanation of Verification, 2011 Tax forms and Tax Return Transcript Decoder.

41  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  NCASFAA and Jim Briggs thank you for your participation.


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