1. ** Client Confidential ** Understanding Tax Returns in Financial Aid and the Verification process

2. ** Client Confidential ** F. Duane Quinn Director of Training and Development American Student Assistance (ASA) quinn@amsa.com

3. ** Client Confidential ** Forms: Non-filer  Gross under $7850. and not claimed by another  Claimed by parents, but gross less than $4700.  Not owed a refund of withholding  Unearned income < $700

4. ** Client Confidential ** Forms: 1040EZ  Single or married (filing jointly); no dependents  Income only from wages, salaries, tips and < $50,000  taxable interest income <$400.  Will claim standard deduction

5. ** Client Confidential ** Forms: 1040EZ  Changes for 2002: –Remove Rate Reduction Credit Line 7 –Earned Income Credit moves to line 8 –Tax paid moves to 10

6. ** Client Confidential ** Forms: 1040A  Income under $50,000., wages, salary  Will take standard deduction  Can get IRA; Hope; Student loan interest deduction

7. ** Client Confidential ** Forms: 1040A  Changes for 2002: –Removal of Rate Reduction Credit line 30 –Tax paid becomes line 36 –EIC moves to 41 –Additional Child Tax credit moves to 42

8. ** Client Confidential ** Forms: 1040 - Must use to…..  Report non taxable interest, dividends, capital gains  Claim Itemized deductions  Claim deductions for: moving expenses, payment of alimony, SEP  Parents reporting child’s Interest & Div...  Business; Rental; Trust; Partnership

9. ** Client Confidential ** New on 1040 for 2002  New Off-sets to Total Income (Educator and Tuit. And Fee) AGI moves to line 35  Eliminate Rate Reduction Credit line 47  Taxes Paid moves to line 55  Earned Income Credit moves to 64  Additional Child tax credit moves to 66

10. ** Client Confidential ** Forms:1040 Some Schedules  “A” : Itemized Deductions  “B” : Interest and Dividend Income  “C” or “C-EZ” : Business Profit / Loss  “D” Capitol Gains and Losses  “E” : Supplemental Income (Rental, Partnerships, Trusts)

11. ** Client Confidential ** Forms: Letter 1722 (DO)  Transcript of Tax Information  Request and receive “on the spot” with proper identification.  Acceptable for verification  RTFTP -issued when 1722 not available  Letter 2951C; 8055C; 8059C

12. ** Client Confidential ** Federal Tax Forms and Verification  Federal tax returns form the backbone of the official verification process

13. ** Client Confidential ** Federal Verification  Applications with Conflicting Information –Must resolve all; even if not selected  Verify all selected; but not in excess of 30% of “applicants” –School policy on selection of students to be verified –School policy on definition of “applicants”

14. ** Client Confidential ** Documents to Collect:  Federal Verification Worksheet or Institutional Form  Appropriate Tax Document –Original signature; copy; preparer stamp (copy) are all OK  “Other” if necessary

15. ** Client Confidential ** Required Verification Items  Household Size  Number in College  Adjusted Gross Income  U.S. Income Tax Paid  Certain Untaxed Income / Benefits

16. ** Client Confidential ** “Certain” Untaxed Income  Untaxed Social Security Benefits  Child Support  IRA / Keogh Distributions  Foreign Income Exclusion  Earned Income Credit  Interest on Tax-free Bonds

17. ** Client Confidential ** Required Verification Items from Tax Returns  Adjusted Gross Income (AGI)  U.S. Income Tax Paid  Some Untaxed Income / Benefits

18. ** Client Confidential ** Verification Items from Tax Returns

19. ** Client Confidential ** Remember!!!!!  Other required verification Items not found on IRS forms: –Child Support Rec’d –Welfare –Household size not always = exemptions –Number in college

20. ** Client Confidential ** Verifying Child Support:  Signed Verification Worksheet –or  Statement signed by Parent and Student –or  Copy of Divorce Decree / Canceled Checks / Statement of non-custodial - or  Not required to verify if same amount as was verified last year

21. ** Client Confidential ** Verifying Household Size  Signed Verification Worksheet  Institutional Form  Signed Statement with names; ages; relationship to student

22. ** Client Confidential ** Household Size (Cont’d)  Not need to verify if: –SAR / ISIR within 90 days of signature –same as verified last year –Married- 3 / Single - 2 –Independent single with HH of 1 or married -2

23. ** Client Confidential ** Verifying Number in College  Signed Verification Worksheet  Signed Institutional Form  Signed Statement with names; ages; institutions  Not Required if: SAR w/in 90 days of signature; Enrolled at your school; number in college is 1