Remote Processing - What Does This Mean?

Report
Presented by,
JoEllen Soucier,
Vice President of Operations
ProEducation Solutions, LLC
1
Verification Defined
Components of Verification
May Webinar – Brief Overview
Verification Requirements
Common Errors
Using Tax Transcripts and IRS Data Retrieval
Publication 17 – Tax Knowledge
Identifying Conflicting Information and Correcting
Data
2013-2014 Changes
2
Questions to answer:
 Why do we perform Verification?
 Difference between Verification and Resolving
Conflicting information?
 What are we expected to know?
 What information are we required to check?
 How do we resolve conflicting information?
 What are common mistakes?
 How do we handle difficult cases?
Verification violations are #7 on the top 10 audit findings and
#1 on the top 10 program review findings
Source: U.S. Department of Education – Session C-30
3

Selection
(34 CFR 668.54) (AVG-76)

(AVG-103)
◦ Publication 17
◦ Marital Status
◦ Required to File
◦ Filing Status
◦ CPS
◦ Institutional – Criteria or
Known Issues
◦ Student
◦ PJ – Professional Judgment
◦ Outside Sources
 Type of Tax Return
 Head of Household
 Agency
 Department

Verification Items
(AVG-76 – 668.56)
◦ Household Size and Number
in College
◦ AGI and Tax Paid
◦ Education Credits and
Untaxed Income
◦ New Items - SNAP and Child
Support Paid
◦ Non-tax filer – Income
Earned from Work
Tax Knowledge

Conflicting Information
(AVG- 3, 77, 83, 84, 85,
99, 103, 104,106)
◦ Paper or within system
◦ Application
◦ Taxes
◦ QA not exempt
◦ Report Suspected Fraud
Of course, you must document your findings in the student’s file and explain why, not simply
assert that, your decision is justified. (AVG-104)
4
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Student Dependency Status HEA Sec. 480(d)
◦
◦
◦

If no official documentation can be
obtained, documented interview with the
student will suffice. This is not a
dependency override or PJ.
Parent – Who and Which
◦
IFAP – Completing the


◦
◦

2012-13
◦
◦
71 Pages of FAFSA filing instructions with FAQs,
examples, and guidance.
◦
◦
Which parent did student live with more
during the 12 months preceding FAFSA
completion date.
If live(d) with neither or both equally, which
parent provided more financial support
during the 12 months preceding FAFSA
completion date.
If financial support is exactly 50/50, which
parent has the greater income and benefits.
Marital Status for Tax Filing is determined on
December 31st
Definitions – Publication 17
State law governs whether married or legally
separated under a divorce or separate
maintenance decree.
◦

All states except Delaware, Florida, Georgia,
Mississippi, Pennsylvania, and Texas
recognize legal documentation of separation.
Dislocated Worker Status (AVG 27-30)
◦
◦

Thank you Beth Post-Lundquist
Dianne Pepitone
Heather McDonnell
Michelle Fountaine
Howard Leslie
Based on day FAFSA filed – PJ can be used to
update (HEA Sec. 475(f)(3), 34 CFR 668.55(b)
Common-law recognized in Alabama,
Colorado, Iowa, Kansas, Montana, New
Hampshire, Rhode Island, South Carolina,
Texas, Utah, and District of Columbia.
Marriage – union between man and woman.
Same-sex unions are not considered marriages
for federal purposes, including the FAFSA.
Tax Marital Status
◦
FAFSASM
Priority Order for Divorced or Separated
Parents
◦
Marital Status - FAFSA
◦
Schools decision to require supporting
documentation (other than age)
Types of supporting documentation
Conflicting information must be resolved
Homelessness (AVG-105)
◦


Dislocated worker is defined (see 29 U.S.C.
2801) in the Workforce Investment Act of 1998
or WIA.
Verifying dislocated worker status is not
required for 2012-2013 under 34 CFR 668.56
Verification Policies and Procedures (AVG76) (34 CFR 668.53)
◦
◦
Best Practices
Philosophy
http://www.nysfaaa.org/docs/toc_events.html#training
5
 Requires the processing of all changes and corrections to
an applicant’s FAFSA information
 Eliminates $400 tolerance; replaces with $25 tolerance for
any item
 Must report all changes, not just those that impact Pell
Grants
 Eliminates the 30% institutional verification cap
 Allows the Secretary to include any item from the FAFSA for
possible verification
 Replaces the five verification items for all selected
applicants with a targeted selection of items based upon
each student’s characteristics
QA schools are not exempt from
resolving conflicting information.
6
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All Applicants Selected by
CPS
◦
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◦
Household Size
Number in college
Child Support Paid (if reported)
SNAP – Food Stamps
◦
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Adjusted Gross Income (AGI)
Federal Income Taxes Paid
Untaxed IRA Distributions
Untaxed Pensions
IRA Deductions
Education Credits
Tax Exempt Interest Income
Tax Filers
Non-Tax Filers

Sample verification worksheets
◦
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Verification before PJ
◦


If you use PJ for a student who was selected for
verification (by you or the Department), you must
complete verification before exercising professional
judgment. However, using PJ does not require you to
verify a student’s application if he was not selected
for verification. If you make a PJ adjustment, you
must set the FAA Adjustment flag in FAA Access.
Acceptable documentation
◦
◦
◦ Income Earned From Work
The worksheets included in this chapter are
provided by the Department as samples; you are
permitted, but not required, to use them. You may
modify them, design your own worksheets, or use
someone else’s. Also, you may require other
documentation in addition to or instead of a
completed worksheet.
Do not, however, affix the seal of the Department of
Education to any verification documents.
34 CFR 668.57
For application information that is selected for
verification in the future, the required
documentation will be given in the Federal Register.
See DCL GEN-11-13 for guidance about verifiable
information for 2012–2013.
Verification regulations
◦ 34 CFR 668.51–61
7
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Income Earned from Work (tax filers)
◦
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W2 and 1099 Forms
Schedule C
Schedule K-1
1040-Line 7+12+18, 1040A-Line 7, 1040EZ-Line 1
◦
◦
Signed Statement or Verification Worksheet
Copy of a separation agreement/divorce decree, a statement from child support payer, or copies of
cancelled checks.
Child Support Received
Other Untaxed Income
◦
◦
◦
◦
Housing, food and other living allowances
Worker’s Compensation or Disability
Unreported Income
Other Miscellaneous sources – excluding those listed on the FAFSA instructions
◦
◦
◦
W2 form
Statement from college or university
Signed Statement
◦
◦
◦
Tax form
W2 or 1042-S
Signed Statement
◦
◦
W2
Signed Statement
◦
Statement from college or signed from statement from the student
Taxable Earnings from Need-based Employment Earnings
Taxable Student Grant and Scholarship Aid
Combat Pay or Special Combat Pay
Earnings from work under a cooperative education program
You may at your discretion
require a student to verify
any FAFSA information and
to provide any reasonable
documentation in accordance
with consistently applied
school policies. (AVG-76)
8

Income Earned from Work – Subtracting a negative business loss on line 12 of
1040 from Line 7.
◦ Earning information may be on the W-2 forms, or on IRS Form 1040—lines 7 + 12 + 18 +
Box 14 (Code A) of IRS Schedule K-1 (Form 1065); on 1040A—line 7; or on 1040EZ—line 1.
If any individual earning item is negative, do not include that item in your calculation.

Tax Paid figure from the incorrect tax line.
◦ Using line 37 of 1040A instead of line 35 or Using line 60 of 140 instead of line 55
◦ Using Total Tax Liability TP Figures Per Computer on the 1040 Tax Transcript instead of
Income Tax After Credits Per Computer


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Using all amounts on line 12 (a-d) to report tax-deferred pension instead of just
codes D, E, F, G, H, and S.
Untaxed social security benefits are no longer reported on FAFSA.
IRA distribution is not appearing as a rollover, therefore must be reported.
Selecting “Eligible to File 1040A” as Yes when there is an amount on lines 10 or
13 of 1040
◦ Refunds of State/Local Taxes or Capital Gains or Loss on Tax Transcript


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Including foster children in household size or parents in number in college.
Not questioning Head of Household tax filing status for a married couple.
Unresolved marital status conflicts.
Education Tax Credit – Adding the refundable amount to the income inclusion.
9
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Household size – Parent(s) listed conflicts with FAFSA reported
data or Tax Form(s) submitted. Different parents.
Marital Status conflicts with taxes or other documentation
provided.
Head of Household status conflicts with marital status reported
on FAFSA or verification worksheet.
Information reported on the FAFSA but not listed on a verification
worksheet.
Untaxed income conflicts with information on the tax form.
Example: An amount appears on line 50 of 1040 (Ret. Sav. Cont.)
but no tax-deferred pension is reported as untaxed income.
Both Parent and Student claim the student as an exemption on
their taxes.
Student or parent selected “did not file”
◦ Wages requiring taxes to be filed.
There are times when you don’t need to verify a
student’s application. Except in the case of the
student’s death, however, none of the
exemptions excuse you from the requirement to
resolve conflicting information. (AVG-77)
10
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All documents collected must be reviewed for conflicting information.
A common area where conflicting information arises is through the
school’s review of an applicant’s tax return(s).
ED refers financial aid administrators to specific pages in IRS Publication
17 as a resource for understanding basic tax law and detecting when
conflicting tax information affects Title IV eligibility.
Financial aid administrators are required to know:
◦ Whether a person was required to file a tax return.
◦ What the correct filing status for a person should be.
◦ An individual cannot be claimed as an exemption by more than one
person.
Conflict – Will it have an affect on EFC calculation?
34 CFR 668.16(f).
34 CFR 668.54(a)(3).
34 CFR 668.61.
2012-2013 Federal Student Aid Handbook, p. AVG-78.
11

Marital Status
◦ Marriage Certificate, Divorce Decree, or Statement of Separation

Filing Status or Exemptions
◦ Statement of Confirmation
◦ Amended Taxes

Untaxed Income
◦ Written Statement, Wage Forms, or Tax Schedules

Number in College
◦ Enrollment Confirmation
◦ Written Statement

Household Size
◦ Written Statement
USA Fund University – Verification – January 31, 2012
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Verification Tolerance Option
◦ Tolerance limit is $25 for each dollar-related item. If any item goes above $25, all
items must be corrected.
◦ Tolerance option may not be used for non-dollar-related items.
2012-2013 - regulations now require all corrections to be submitted for
applicants receiving subsidized, or need-based, Title IV aid.
Federal Register, Vol. 75, No. 209, p. 66906


Regulations allow schools to update the applicants’ marital status if the change
reflects a more accurate picture of their ability to pay or to address an inequity.
In such cases where an FAA chooses to update a student's dependency status as a
result of a change in the student‘s marital status regardless of whether the student is
being verified, all of the information must be consistent with the change to the marital
status.
2012-2013 Federal Student Aid Handbook (AVG-85)


A student’s application might be selected for verification after corrections are
submitted and the student has been paid based on the previous unselected CPS
transaction. You must verify application before making further disbursements.
If verification does not justify aid already disbursed, then the student is responsible
for repaying all aid for which he is not eligible, though he may keep any Stafford loan
money he received and FWS wages he earned. Changes to FAFSA information (668.59)
When there is an over-award from a regular
disbursement, the following individual program
regulations apply—
Pell grants: 690.79
Perkins and FSEOG: 673.5(f)
Subsidized DL: 685.303(e)
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

Students and Parent can use the IRS Data Retrieval
2012-2013 FAFSA
Tool beginning February 6, 2012.
Instructions:
The easiest way to
Tax data can be retrieved:
complete your FAFSA
◦ 2 weeks after filing electronically
◦ 8 Weeks after filing by paper

IRS DRT Online Logic
◦
◦
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◦
◦
with accurate tax
information is by using
the IRS Data Retrieval
Tool through
www.fafsa.gov.
Filing timeframe
Completion - “Already completed”
Marital Status
Filing Status (eg. HOH)
Dynamic Filtering Questions
Eligible or Ineligible Message
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Dynamic Filtering/Logic – Ineligible to use if:
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Has not file taxes
Filed by paper in past 8 weeks
Filed electronically in past 2 weeks
Tax filing status is Married Filing Separately
Married student or parent with Head of Household tax filing
status
Divorced, Separated, or Widowed filing a Joint Tax Return
Filed an Amended Tax Return
Filed a Puerto Rican or Foreign Tax Return
Victim of Identity Theft
Instructions encourage those who could not use because they
haven’t filed or recently filed to go back and retrieve tax data using
the online corrections process.
Emails sent by CPS with reminders to go back and use IRS DRT.
Ineligible applicants will receive the message, “Based
on your response, you are not eligible to transfer your
information from the IRS into this FAFSA.”
15
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IRS DRT used and successfully transferred unchanged will
result in an IRS DRT flag = 02
Successful DRT flag (02) satisfies the verification of AGI, taxes
paid, and other tax data. Wages and other untaxed income
(such as tax-deferred pension) is not part of the DRT.
Verification Requirements
◦ Household Size – Exempt if:
◦
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Dependent, parents married, and household size = 3
Dependent, parent S/D/S/W, and household size = 2
Independent, married, and household size = 2
Independent, S/D/S/W, and household size = 1
Number in College – Exempt if number is 1
SNAP Benefits
Child Support Paid
Wages for non-tax filers
IMPORTANT: Updating tax data
(such as a blank tax paid to 0)
sent for corrections will result in
a changed record returning an 04
flag – tax transcript will be required.
Page 3 of the ISIR –
Lower Right Hand Side
16
02 Data Flag – School can waive the requirement of
collecting a copy of tax transcript, if selected.
However, school can still choose to require student
to submit a copy of tax transcript for verification.
17

Dear Colleague Letter GEN-11-03:
◦ Since most applicants can quickly and easily access IRS data through the FAFSA-
IRS Data Retrieval process, we no longer consider it reasonable for an institution
to accept anything less reliable than direct IRS-supplied evidence for
verification of income data. Therefore, if an applicant selected for verification
has not successfully transferred information from the IRS, or one who did
transfer the information but then changed it, the Department expects the
institution to require the applicant, and if necessary the applicant's parents, to
provide an official IRS transcript of their Federal income tax information.

Acceptable Documentation
◦ 34 CFR 668.57(a) and (d).
FR, Vol. 76, No. 134, pages 41231-41233.
Dear Colleague Letter GEN-11-03.
Dear Colleague Letter GEN-11-13.
◦ Priority Order for Acceptable Documentation (Federal Register 7/13/11):
 First priority: Unaltered IRS data retrieved by tax filers using FOTW (02 code).
 Second priority: IRS tax transcript for 2011, if IRS data was not retrieved or if it was
retrieved and then changed.
 Third priority: Signed copy of tax filer’s 2011 federal income tax return, but only if the
school determines that obtaining an IRS tax transcript is not possible (documentation).
18

Methods of Requesting:
◦ Online using www.irs.gov – Results in paper transcript mailed 5-10 days
◦ Telephone 1-800-908-9946 - Results in paper transcript mailed 5-10 days
◦ IRS Form 4506-T obtained at www.Irs.gove/pub/Irs-pdf/f4506tez.pdf Results in paper transcript mailed 5-10 days
 Option for allowing the transcript to be sent to a Third Party

The IRS provides three types of transcripts free of charge:
◦ Tax Return Transcript: Provides original answers for most line items on the
tax return.
◦ Tax Account Transcript: Provides some of the information found on a tax
return transcript, along with any adjustments made by the tax filer or the
IRS after the original return was filed. Used for amended taxes.
◦ Record of Account Transcript: Insufficient for verification purposes.

Signature Requirement on the Tax Transcript –
◦ GEN-11-13 stated that collecting signatures on IRS tax transcripts for
verification purposes is encouraged, but not required.
19
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

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Tax Transcript Requirements
◦ Identity Theft Victim – Cannot obtain a tax transcript
◦ Schools may, until July 15, 2012, use a signed copy
of a 2011 IRS Tax Return as acceptable verification
documentation for the 2012-13 award year, the
Department of Education (ED) announced Dear
Colleague Letter GEN-12-07.
Line items reference on the FAFSA and Tax Forms
1040/A/EZ do not appear on the IRS Tax
Transcript.
Line items on IRS Tax Transcript are identified by
name.
For verification purposes, it is important to
identify the correct line items for comparing the
answers on the FAFSA.
20
Documentation for Filers that Amend Taxes:
 IRS Tax Transcript for all filers who amended or required to amend taxes
 Signed Copy of Form 1040X – Amended Tax Return
 Signed Copies of Original Tax Return
 Tax Account Transcript with correct filing status or changes made on
1040X
E-Announcement 08/21/12:
We have determined that neither an IRS Tax Return Transcript nor an IRS Tax Account
Transcript, either individually or together, provide all of the information needed for
verification when the tax filer filed an IRS Form 1040X “Amended U.S. Individual Income
Tax Return”.
Therefore, when an institution is aware that the tax filer filed, or will file, an amended tax
return with the IRS, it must obtain signed copies of both the original tax return and the IRS
Form 1040X that were filed with the IRS.
The institution would use the information from both forms to complete verification.
This amended tax return guidance supersedes any prior guidance that we have provided. We will update
our Program Integrity Questions and Answers Verification Web site in the near future.
21
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
Student Aid Handbook (AVG-103) - We have already stated that financial
aid administrators do 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 was required to file a tax return,
◦ 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.
AVG-104: For example, an FAA noticing that a dependent student’s married parents have each filed as
“head of household” (which offers a greater tax deduction than filing as single or married) must question
whether that is the correct filing status. Publication 17 explains on pages 21–23 the criteria a person
must meet to file as head of household. Resolution of the conflict may be a reasonable explanation of
why there appears to be a conflict but is none, or the parents may re-file and submit a copy of the
amended return.
22

Online Location
◦ http://www.irs.gov/publications/p17/index.html

Information
◦ Required to file
◦ Criteria for filing 1040, 1040A, 1040EZ
◦ Filing Status
 Married filing joint, Married filing separate, Head of household
◦
◦
◦
◦
◦
Marital Status
Exemptions
Description of forms and schedules
Tax Tables
What’s new

http://www.irs.gov/publications/p17/ar01.html
Making work pay credit. The
making work pay credit has
expired. You cannot claim it on
your 2011 return. Schedule M
is no longer in use.
23
SSN Provided: 432-xx-xxxx
Tax Period Ending: Dec. 31, 2011
FILING STATUS:
FORM NUMBER:
CYCLE POSTED:
RECEIVED DATE:
REMITTANCE:
EXEMPTION NUMBER:
DEPENDENT 1 NAME CTRL:
DEPENDENT 1 SSN:
DEPENDENT 2 NAME CTRL:
DEPENDENT 2 SSN:
DEPENDENT 3 NAME CTRL:
DEPENDENT 3 SSN:
DEPENDENT 4 NAME CTRL:
DEPENDENT 4 SSN:
PREPARER SSN:
PREPARER EIN:
Married Filing Joint
1040
20062508
Apr.15, 2012
0.00
4
GODW
429-XX-XXXX
GODW
432-XX-XXXX
P00-59-XXXX
71-XXXXXXX
24
1040EZ
Source: United Student Aid Funds, Inc. 2012
25
1040A
Source: United Student Aid Funds, Inc. 2012
26
1040
Source: United Student Aid Funds, Inc. 2012
27
Working with the Tax Transcript
1040
Source: United Student Aid Funds, Inc. 2012
28

Marital Status for Tax Filing is determined on December 31st
o
o
Married living with spouse – only 2 choices for filing taxes
•
Married filing joint or Married filing separately
Not legally married - must file as Single or HOH
Head of Household Definition (Publication 17)
 You may be able to file as head of household if you meet all of the following
requirements.
◦ Unmarried or “considered unmarried” on the last day of the year
◦ Paid more than half of the cost of keeping up a home for the year
◦ A “qualifying person” lived in the home for more than half the year


If “qualifying person” is your dependent parent, he/she does not have to live in home.
Considered Unmarried on the last day of the tax year , if:
File a separate return
Paid more than half the cost of keeping up your home for the tax year
Spouse did not live in home during last 6 months of the tax year
Home was the main home of child, stepchild, or foster child for more than half the year.
Home of qualifying person
◦ Must be able to claim an exemption for the child
◦
◦
◦
◦

FAA noticing that a dependent student’s married parents have each filed as “head
of household” - Must question whether or not there is an incorrect filing status.
Publication 17 (pg. 23) – Your girlfriend lived with you all year. Even
though she may be your qualifying relative, she is not your qualifying
person for head of household purposes because she is not related to
you under the tax definition of Relative.
29
Eligible to file a 1040A or 1040EZ
 Taxable income is less than $100,000
 Do not itemize deductions
 Do not receive income from real estate, business,
farm, or other income
 Do not receive alimony
Not Eligible to file a 1040A or 1040EZ
 Itemize deductions
 Self-employed
 Receive alimony
 File schedule D for capital gains
30

Student reporting not required to file a 2011 income tax return
◦ Income is reported using W-2 forms and other tax or benefit documents

Student must file federal taxes if:
◦ Dependent student claimed by a parent earning more than $5800 or receiving
unearned income of more than $950.
◦ Independent unmarried student earning more than $9,500.
◦ Married filing jointly earning more than$19,000.
◦ Students with business income of over $400.


Dependent students who are claimed by their parents cannot
claim themselves on their taxes. If both claim, student must
amend.
Dependent students must complete asset information as of the
FAFSA filing date. Assets include cash, savings, checking,
stocks, bonds, investment property, and trust funds.
31

Household size (questions 72 and 93) includes:
◦ INDEPENDENT STUDENT:
 Student and his or her spouse
 Student’s children
 Other persons who live with and receive more than half their support from the student.
◦ DEPENDENT STUDENT:
 Student and parent(s), even if the student is not living with them.
 The student’s siblings and children, if they will receive more than half their support from
the student’s parent(s) from July 1, 2011, through June 30, 2012.
 Siblings need not live in the home.
 Other persons who live with and receive more than half their support from the student’s
parent(s) and will receive more than half support for the entire award year.
AVG-26: For children in the household size, the “support test” is used rather
than residency because there may be situations in which a parent supports a
child who does not live with her, such as when the parent is divorced or
separated. If the parent receives benefits (such as Social Security payments)
in the child’s name, these benefits must be counted as parental support to
the child. An exception to this is foster care payments, which typically cover
the costs of foster children, who for FSA purposes are not considered
children of the foster parents and are not counted in the household size.
32
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Foster children, who for FSA purposes, are not considered children of the
foster parents and are not counted in the household size.
To determine whether to include children in your household size, the
support test is used (rather than a residency requirement).
The parent who provides more than half of the child‘s support may claim
the child in his or her household size.
If a parent receive benefits (such as Social Security or Temporary
Assistance for Needy Families [TANF] payments) in the child‘s name,
these benefits are be counted as parental support to the child.
Support includes money, gifts, loans, housing, food, clothes, car
payments or expenses, medical and dental care, and payment of college
costs.
The number of family members reported determines the allowance that will be subtracted from
the family‘s income to provide for basic living expenses when the Department‘s processor
calculates the Expected Family Contribution (EFC).
33

Number in College always includes the student, parents are not
included.
◦ Others who count in the household size are in the number in college if
they are or will be enrolled at least half time, in an eligible program, at
a school eligible for FSA funds.
◦ The definition of half-time enrollment for this question must meet the
federal requirements even if the school defines half time differently.
◦ Do not include students at a U.S. service academy because most of
their primary educational expenses are paid for by the federal
government.
 Military service academies and preparatory schools: U.S. Military Academy (West Point);
U.S. Naval Academy (Annapolis); U.S. Air Force Academy; U.S. Coast Guard Academy; U.S.
Merchant Marine Academy; U.S. Military Academy Preparatory School; Naval Academy
Preparatory School; U.S. Air Force Academy Preparatory School .
34

Child Support Paid - Statement signed by the individual.
◦ Who paid support, listing the amount paid, the child support recipient, and the name of
the child (children) for whom support was paid.
◦ If the school believes information to be inaccurate, it must obtain documentation.
◦ Verification Worksheet - Checking the Child Support Paid box in Section D or E and signing
the worksheet in Section E or F suffices as acceptable documentation for child support
paid.

Supplemental Nutrition Assistance Program (SNAP)/Food Stamps Statement signed by the individual.
◦ Documentation is a signed statement by the student or parent, as appropriate, affirming
the response provided on the FAFSA that someone in the household did receive SNAP
benefits in 2010 or 2011.
◦ Checking the SNAP box in Section D or E and signing the worksheet in Section E or F
suffices as acceptable documentation for SNAP benefits (food stamps) unless the school
requires additional documentation.
35



Tax Filers – not a required verification item but can be questioned,
corrected, or cause conflicting information
Non-Tax Filers – Verify wages with documentation
Wage Statements
◦ Form W-2
◦ Form W-2G – Gambling Winnings
◦ 1099 Series

Location of Wage Figures
◦
◦
◦
◦
W-2 (line 1 or 5)
Form 1040–Lines 7+12+18 (negative figure on line 12 is treated as 0)
Form 1040A-Line 7 and 1040EZ-Line 1
IRS Schedule K-1(form 1065)-Box 14 (Code A)
36











Sharon is an independent student with no dependents
HHS = 1 and # in College = 1.
Used DRT and ISIR code = 02.
School waives tax transcript for all ISIR codes = 02.
EFC is 3676.
Student self reported wages as 9,600 and all other tax
information was retrieved from IRS.
Student submitted tax transcript, even though the school
didn’t ask for it or require it.
Wages, Salaries, Tips, Etc: figure on the tax transcript is
$19,226.
FAA updated wages to $19,226 and sent for corrections.
EFC came back as 3313.
Student became eligible for another $300 in Pell (cost of a
couple text books).
37

Untaxed Portions of IRA Distributions
◦ Used IRS Data Retrieval – Data Flag 02
◦ Tax Transcript –
 Total IRA Distributions minus Taxable IRA Distributions
◦ Unable to Obtain Tax Transcript (must be documented)
 1040 – Line 15a minus 15b
 1040A – Line 11a minus 11b

Untaxed Portions of Pensions
◦ Used IRS Data Retrieval – Data Flag 02
◦ Tax Transcript –
 Total Pension and Annuities minus Total Pension/Annuity Amount
◦ Unable to Obtain Tax Transcript (must be documented)
 1040 – Line 16a minus 16b
 1040A – Line 12a minus 12b

IRA Deductions
◦ Used IRS Data Retrieval – Data Flag 02
◦ Tax Transcript –
 1040 – KEOGH/SEP Contribution Deductions plus IRA Deduction Per Computer
 1040A – IRA Deduction Per Computer
38

Education Credits (tax deduction, not tax credit):
◦
◦
◦
◦

American Opportunity Tax Credit
Hope or Lifetime Learning Tax Credit
Form 1040-Line 49
Form 1040A-Line 31
Taxable Grant and Scholarship:
◦ Qualified scholarship and fellowship grants are treated as tax-free amounts if
the following conditions are met:

Candidate for a degree at an educational institution that maintains a regular faculty and curriculum
and normally has a regularly enrolled body of students in attendance at the place where it carries on
its educational activities; and

Amounts receive as a scholarship or fellowship grant are used for tuition and fees required for
enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment
required for courses at the educational institution.
Scholarships or Grants: You must include in gross income amounts used for incidental
expenses, such as room and board, travel, and optional equipment, and generally
amounts received as payments for teaching, research, or other services required as a
condition for receiving the scholarship or fellowship grant. Also you must include in
income any part of the scholarship or fellowship that represents payments for services.
39

Tax-exempt interest income
◦ Certain types of interest, such as interest on municipal bonds, are
tax-exempt.
◦ Line 8b on both the 1040 and 1040A.

First-time Homebuyer Credit.
◦ 1040 – Line 67
◦ Publication 17 
To claim the first-time homebuyer credit for 2011, must have been a
member of the uniformed services or Foreign Service or an employee
of the intelligence community on qualified official extended duty
outside the United States for at least 90 days during the period
beginning after December 31, 2008, and ending before May 1, 2010.
◦ Reported as “Any other untaxed income not reported elsewhere.”

Health Savings Accounts (AVG-19)
◦ 1040 – Line 25. Some thought that they should be excluded from
the need analysis just as flexible spending arrangements are, but
because HSAs are like tax deferred pension and savings plans, they
should be treated similarly.
◦ Reported as “Any other untaxed income not reported elsewhere.”
40

Untaxed Social Security Benefits – all untaxed social
security benefits are excluded on the FAFSA, including
those that appear on the tax form
◦ 1040–Line 20a minus 20b or 1040A-Line 14a minus 14b







Credit for child and dependent care expenses
Child tax credit
Residential energy credits
Earned income credit
Additional child tax credit
American opportunity credit
Credit for federal tax on fuels
41


Not a required verifiable item but may be questioned.
Applicant/Parent is not required to report assets on FAFSA if
quality for simplified formula or automatic 0 EFC:
◦ Independent student’s taxable income is $50,000 or less and
 Student (and the student’s spouse, if any) is eligible to file a 2011 IRS
Form 1040A or 1040EZ or they are not required to file any income tax
return or
 Anyone in the student’s household size (as defined on the FAFSA)
received benefits during 2010 or 2011 from any of the designated
means-tested Federal programs or
 Student (or the student’s spouse, if any) is a dislocated worker
◦ Dependent student - parents’ taxable income is $50,000 or less and
 Parents are eligible to file a 2010 IRS Form 1040A or 1040EZ or they are
not required to file any income tax return or
 Anyone in the parents’ household size received benefits during 2010 or
2011 from any of the designated means-tested Federal programs or
 Either parent is a dislocated worker
42
AUTOMATIC ZERO EFC
The law also provides for an
automatic zero EFC for some
students.
The CPS will assign a 0 EFC to
a dependent student if:
• the parents’ combined AGI
(tax filers) or combined income
earned from work (non-filers) is
$23,000 or less, and
• either: (1) the parents were
not required to file an IRS Form
1040, (2) one of them is a
dislocated worker as defined in
the Workforce
Investment Act of 1998, or (3)
anyone counted in their
household size received a
means-tested federal benefit in
2010 or 2011.
An independent student with
dependents other than a
spouse qualifies for 0 EFC if:
• the student’s and spouse’s
combined AGI (tax filers) or
combined income earned from
work (non-filers) is $23,000 or
less, and
• either: (1) the student and
spouse were not required to file
an IRS Form 1040, (2) one of
them is a dislocated worker , or
(3) anyone counted in the
household size received a
means-tested federal benefit in
2010 or 2011.
Independent students with no
dependents other than a
spouse do not
qualify for an automatic zero
EFC.
SIMPLIFIED FORMULA
The simplified formula is
basically the same as the
regular formula except
that asset information isn’t
considered in calculation.
A dependent student
qualifies for the simplified
calculation if:
• the parents’ combined
AGI (tax filers) or income
earned from work (nonfilers) was less than
$50,000, and
• either: (1) the parents
were not required to file
an IRS Form 1040, (2)
one of them is a
dislocated worker , or (3)
anyone counted in their
household size received a
means-tested federal
benefit in 2010 or 2011.
An independent student
qualifies for the simplified
calculation if:
• the student’s and
spouse’s combined AGI
(tax filers) or income
earned from work (nonfilers) was less than
$50,000, and either: (1)
the student and spouse
were not required to file
an IRS Form 1040, (2)
one of them is a
dislocated worker , or (3)
anyone counted in the
household size received a
means-tested federal
benefit in 2010 or 2011.
43
(AVG-35)
 Case
Study Questions
 Real Life Examples
 Q & A – May Webinar
 Publication 17
 Student Aid Handbook
 Training
44
B. Dependent Student’s Family Information
Include the name of the college for any household member, excluding your parent(s), who will be enrolled, at least half time in a
degree, diploma, or certificate program at a postsecondary educational institution any time between July 1, 2012, and June 30,
2013. If more space is needed, attach a separate page with the student’s name and Social Security Number at the top..
Full Name
Missy Jones (example)
Age
Relationship
College or University
Will be Enrolled at Least
Half Time
18
Sister
Central University
Yes
Mary Smith
19
Self
My Home Town College
Yes
John Smith
45
Father
Medical School
Yes
Susan Smith
44
Mother
None
No
Carrie Smith
21
Sister
Foreign University
Yes
Michael Smith
25
Brother
Away City University
Yes
Shawn Smith
15
Brother
None
No
Bridgett Coleman
12
Foster Child
None
No

What is the correct number in household and number in college?




A.
B.
C.
D.
7 in household and 4 in college
6 in household and 3 in college
6 in household and 2 in college
5 in household and 1 in college
45

What is the correct number in household and number
in college?
C. 6 in household size, 2 in college.
 Foster children, who for FSA purposes are not counted in the household.
 The applicant is always included in the number in college, but parents are
not included.
 Others who count in the household size are in the number in college if they
are or will be enrolled at least half time in an eligible program at a school
eligible for any of the FSA programs.

Common mistakes – Including foster children in household size. Including
parents in number in college.
Household size and Number in College
Student assistance general provisions
34 CFR 668.57(b)
34 CFR 668.57(c)
46

Why is the 25 year old brother who is away in college
included? Shouldn’t the answer be 5 and 1?
 Brother is independent and would not be required to list parents on his
FAFSA. Should that exclude him from HHS and # in College?
 No, support test is used not age or college attendance. If parents are providing
more than 50% support then you can include in household size and number in
college, even if the parents do not claim the person on taxes.
 School has the option to question and require documentation or a signed
statement confirming that the parents are providing more than 50% support.
Federal financial aid received by the brother may be included as part of his
support.
 AVG-26
 See example (bottom left hand corner).
 Support test used rather than residency.
47

George is an independent student who has been selected for verification. He
did not use the Data Retrieval tool, therefore has to provide a copy of his tax
transcript to the financial aid office. He filed the 1040 and the following
lines items appear on the tax transcript:
Exemptions……………………………………………………………..
Wages, salaries, tips………………………………………………..
Tax-Exempt Interest…………………………………………….….
Taxable IRA Distributions……………………………………….….
Total Income………………..………………………………..........
Student Loan Interest Deductions…………………………
Adjusted Gross Income…………………………………....…..
Education Credit……………………………………………………
Standard Deduction……………………………………………..
Taxable Income…………………………………………………….
Income Tax after credits………………………………………..
5
105,000
125
4190
109,315
1,000
108,315
1,500
11,600
78,215
14,400
Is George eligible to file a 1040A?
A.
B.
C.
D.
No, because his total income is above $100,000.
No, because he itemized deductions.
No, because he is claiming an IRA distribution.
Yes.
25% answered correctly
48

Is George eligible to file a 1040A?
D. Yes.
◦ Can use Form 1040A if all of the following apply:
 Income is only from wages, salaries, tips, IRA distributions, pensions
and annuities, taxable social security benefits, taxable scholarship and
fellowship grants, interest, ordinary dividends, capital gain
distributions, and unemployment compensation.
 On line 13 “If not required, check here” is checked then they are eligible
to file 1040A. If box not checked, then not eligible to file.
 From the IRS site: “If you have only capital gains distributions and no other
capital gains, you may report the figure directly on Form 1040A line 10 or Form
1040 line 13 without filling out a Schedule D.”
 Taxable income is less than $100,000 (not AGI or wages)

Taxable Income……………………………………………………. 78,215
 Adjustments to income are for only IRA deduction and student loan
interest deduction
 Do not itemize your deductions
Some believe the only items that determine 1040A filing
status is lines 12, 13, 14, 17, 18, and 40. Some don’t realize
there is an income cap and line 13 depends on check box.
49
Meredith completed her FAFSA using the IRS Data Retrieval Tool for both her
taxes and her parents’ taxes. IRS DRT Data Flag is 02-Unchanged. Her
college does not require the tax transcript for 02 flag.
Her mother originally filed as Head of Household and did not list another
parent on the verification worksheet. The file was verified as accurate and
aid awarded.
After receiving the aid package, Meredith’s mother notified the school that
she filed incorrectly. She was required to file married because she was
remarried last September and resides with her new husband.
The parents’ taxes were amended and a new ISIR transaction was received
by the school with an IRS DRT Data Flag = 06 for the parent.

Does this change require the school to take action on the student’s file? If so, what
action is needed?
◦ A. The student was packaged on a valid ISIR, therefore no action is required.
◦ B. The school must obtain a copy of the student and parents’ tax transcripts, as a result of
the change made to the parents’ taxes, and make all appropriate changes.
◦ C. The school must obtain a copy of the parents’ tax transcript, 1040X, original tax return,
and make appropriate changes. The school can continue to waive the student’s tax
transcript requirement because no changes were made to the student’s taxes and the 02
flag remains.
◦ D. The school only needs to request a copy of the parents’ account transcript and only
verify those items that changed.
55% answered correctly
50

Does this change require the school to take action on the
student’s file? If so, what action is needed?
C. The school must obtain a copy of the parents’ tax transcript, 1040X,
original tax return, and make appropriate changes. The school can
continue to waive the student’s tax transcript requirement because no
changes were made to the student’s taxes and the 02 flag remains.
◦ 06 = IRS data for the student/parent was transferred from the IRS, but a subsequent
change made the student/parent ineligible to use the IRS Data Retrieval Tool.
◦ AVG-78: If students cannot or will not use IRS Data Retrieval, either at initial FAFSA
filing or though the FOTW correction process, they must document AGI, taxes paid,
and untaxed income by providing an IRS tax return transcript for the student and
spouse or parents, as applicable.
◦ E-Announcement 08/21/12: When an institution is aware that the tax filer filed, or
will file, an amended tax return with the IRS, it must obtain signed copies of both
the original tax return and the IRS Form 1040X that were filed with the IRS.
◦ An updated account transcript may be requested to document that the
student/parent sent in the 1040X to the IRS for corrections.
51
Joe is a 28 year old student.
He completed the FAFSA and checked off “will not file” taxes.
He reported $2800 of income earned from work (wages), $8000 of
untaxed income, and $3000 of unreported income.
He provided a copy of his W2 with $2,854 in box 1, copy of his
unemployment statement with $8,325 total benefits received, and a
signed verification worksheet with “did not file taxes” checked off
and zero reported on every line item.
The college uses the verification worksheet as a source document.

What corrections need to be made to Joe’s FAFSA?
◦ A. Wages changed to $2854, untaxed income changed to $8325, and
unreported income changed to $0.
◦ B. Wages changed to $11,179, untaxed income changed to $0, and
unreported income changed to $0.
◦ C. Changes can’t be made until unreported income reported on the FAFSA
has been explained by the student
◦ D. Changes can’t be made until the student files a federal tax return and
provides a copy of the tax transcript.
80% answered correctly
52

What corrections need to be made to Joe’s FAFSA?
D. Changes can’t be made until the student files a federal tax return
and provides a copy of the tax transcript.
◦ Joe’s total gross income is $11,179. Unemployment is taxable
and included as part of gross income.
◦ Publication 17:
Table 1-1.2011 Filing Requirements for Most Taxpayers
IF your filing status is...
Single under age 65
THEN file a return if your gross income was at least...**
$ 9,500
**Gross income means all income you received in the form of money, goods, property, and services
that is not exempt from tax, including any income from sources outside the United States or from the
sale of your main home (even if you can exclude part or all of it).
53

Which verification item is NOT an optional verification
data element?
◦
◦
◦
◦
A.
B.
C.
D.
Income earned from work
Assets
Child support paid
Child support received
58% answered correctly
54

Which verification item is NOT an optional verification
data element?
C. Child support paid
◦ New required data element for 2012-2013.
◦ Acceptable documentation to verify:




Statement signed by the individual.
Who paid support, listing the amount paid, the child support recipient, and the name of the child
(children) for whom support was paid.
If the school believes information to be inaccurate, it must obtain documentation.
Verification Worksheet - Checking the Child Support Paid box in Section D or E and signing the
worksheet in Section E or F suffices as acceptable documentation for child support paid.
◦ Assets have not been a required verification items for a few
years.
◦ Income earned from work and child support received are not
required for 2012-2013 but can be requested/verified.
◦ Conflicting information must still be resolved.
55

What data must be corrected for the 2012-2013
processing year?
◦ A. All data that changes the EFC calculation must be
sent to the CPS.
◦ B. Only those items that have a net difference over
$25 need to be corrected on the FAFSA.
◦ C. All data corrections must be submitted for
applicants receiving subsidized or need-based Title
IV aid.
◦ D. Only items that effect Pell eligibility.
51% answered correctly
56

What data must be corrected for the 2012-2013
processing year?
C. All data corrections must be submitted for
applicants receiving subsidized or need-based Title
IV aid.
◦ Pell EFC eligibility changes only are not longer in effect.
◦ New tolerance option is $25 for each dollar-related item. If
any item goes above $25, all items must be corrected. Cannot
use net difference. (AVG-84)
◦ Corrections not required if student is eligible for federal
unsubsidized aid only.
◦ AVG-75 – For all the subsidized aid programs, a school must
get a correct valid SAR or ISIR.
57
Molly Jones: Dependent Student
Mother reported on FAFSA as Divorced/Separated and only
one parent’s income data is reported
Both parents listed on the verification worksheet (VW)
Tax transcript received as Married filing Jointly with a letter
from mother stating that she separated in January 2012

What data must be corrected on the Molly’s FAFSA?
◦ A. Marital status is not a required verification item, no
action required.
◦ B. Parents’ marital status must be changed on the FAFSA
to married because both are listed on VW and taxes filed
jointly.
◦ C. Mother explained separation so no action is needed.
◦ D. There is discrepant information that needs to be
resolved and documentation needed to support
discrepancy clarification.
92% answered correctly
Q & A – May Webinar
58

What data must be corrected on the Molly’s FAFSA?
◦ D. There is discrepant information that needs to be
resolved and documentation needed to support
discrepancy clarification.
Parent marital status is not a required verification item unless you have
conflicting information. If the verification worksheet only listed the
mother, then the statement from mother could be enough to resolve
the discrepancy between taxes and FAFSA data.
School should question whether or not father lives in the household. If
so, they cannot be considered separated.
How the discrepancy is resolved is up to the school and their
policy/philosophy.
If the parents reside in a state that recognizes legal separation, then the
school can request a copy of the legal separation agreement. All
states except Delaware, Florida, Georgia, Mississippi, Pennsylvania,
and Texas recognize legal documentation of separation.
Some schools require documentation (proof) that the parents maintain
separate households by getting copies of utility bills, rental
agreements, etc.
59
Jeff Cramer – Completed FAFSA online using FOTW.
Jeff did not answer some of the required verification items (like
SNAP benefits) and it came back from the CPS as blanks.
School cannot determine if the skip logic on the FAFSA caused the
question to be skipped or if Jeff just left the question blank.
Verification worksheet (VW) was received with information that
conflicts with the blanks.

What does the school need to do with Jeff’s ISIR data, if anything?
◦ A. School should determine if skip logic was used on FOTW
and if so, no action is needed.
◦ B. School must correct the information that is discrepant by
using the VW as a source document or asking for additional
clarification.
◦ C. All required verification items must be corrected if left
blank, even if reported as 0 on the VW.
◦ D. Blanks on the ISIR are equal to answering Yes.
Q & A – May Webinar
60

What does the school need to do with Jeff’s ISIR data,
if anything?
◦ B. School must correct the information that is
discrepant by using the VW as a source document or
asking for additional clarification.
DOE put out an electronic announcement on December 19, 2011 informing
practitioners that the 2012-2013 Central Processing System (CPS) Web
Demonstration site, located at http://fafsademo.test.ed.gov, was available
for use. Financial Aid Administrators (FAA) can use the demo site to
experience the skip logic questions that are being asked of all filers.
If the question isn’t answered as a result of “Skip Logic,” then the answer is no.
If the SNAP benefits question is blank and the student answered no on the
verification worksheet, then you don’t have any conflicting information. If
the verification worksheet is yes, then the FAFSA should be updated to yes or
additional documentation requested.
Skip logic on the FOTW include items such as dependency status (whether or
not parental information is required), assets, filing status, and dependent
student income questions. The skip logic depends on how the filer answers
each question. It is recommended that an FAA use the demo site and answer
the questions in different ways to obtain various results. This will help the
FAA understand how the skip logic works.
61
Nelson Harrison– Not selected for verification.
His sister, Carrie, is attending same college and was selected for
verification.
Household information on Carrie’s Verification worksheet (VW) does
not match number in household on FAFSA for both Nelson and
Carrie. Both applicants reported a different household size.

What action is needed for both Nelson and Carrie?
◦ A. Household size correction is only required for Carrie.
Nelson was not selected for verification so his application does
not need corrections.
◦ B. Corrections must be made on both Carrie and Nelson’s
applications based on Carrie’s VW.
◦ C. Carrie’s application can be corrected based on the VW and
Nelson’s application must be questioned because conflicting
information exists. Both can be questioned if school chooses.
◦ D. No action needed for either applicant.
Q & A – May Webinar
62

What action is needed for both Nelson and Carrie?
◦ C. Carrie’s application can be corrected based on the
VW and Nelson’s application must be questioned
because conflicting information exists. Both can be
questioned if school chooses.
Any and all conflicting information in a student’s file must be
resolved regardless of the student’s selection status. This is very
important for all administrators to remember.
If a file is reviewed and there is conflicting information for any data
element, it must be corrected or resolved. This includes
conflicting information that may exist in other aid years,
regardless of how old the file may be.
If you discover that prior information was incorrect, or may even be
the act of fraud, then it must be resolved and either corrected or
reported to the appropriate government agency. Conflicting
information guidelines can be found throughout the Student Aid
Handbook and online at http://ifap.ed.gov/qadocs/.
63
Hilda Benita – Age 19.
Answered Yes to one of the FAFSA homeless questions and No
to all other independency status questions.
There is no evidence of parents or parental information in the
financial aid or admissions office records.

What documentation is needed to verify Hilda’s independent
status?
◦ A. Student must meet with a financial aid administrator to
discuss homelessness status.
◦ B. No documentation is required. Student is independent
based on answering Yes to the question.
◦ C. School must ask for the homelessness documentation
described in the federal verification guide (AVG).
◦ D. Student must provide a written statement of
explanation.
Q & A – May Webinar
64

What documentation is needed to verify Hilda’s independent
status?
◦ B. No documentation is required. Student is independent
based on answering Yes to the question.
AVG- Pages104 through 106 provides detailed explanations of
homelessness and documentation to support the homeless status.
AVG-106 states that “You are not required to verify the answers to
the homeless youth questions unless you have conflicting
information.”
A documented phone call with, or a written statement from, one of
the relevant authorities is sufficient verification when needed.
“If no official documentation can be obtained, documented interview
of the student will suffice. This is not a dependency override or PJ.”
(AVG-105)
65

Where is the Health Savings Deduction reported on the
FAFSA?
◦ A. Other Untaxed Income.
◦ B. Money received, or paid on your behalf, not
reported elsewhere on this form.
◦ C. How much did you earn form working in 2011?
◦ D. Payment to tax-deferred pension and savings
plans.
66

Where is the Health Savings Deduction reported on the
FAFSA?
◦ A. Other Untaxed Income.
FAFSA: Other untaxed income not reported in items 44a through 44h, such as
workers’ compensation, disability, etc. Also include the first-time homebuyer tax
credit from IRS Form 1040—line 67. Don’t include student aid, earned income
credit, additional child tax credit, welfare payments, untaxed Social Security
benefits, Supplemental Security Income, Workforce Investment Act educational
benefits, on-base military housing or a military housing allowance, combat pay,
benefits from flexible spending arrangements (e.g., cafeteria plans), foreign income
exclusion or credit for federal tax on special fuels.
AVG: Health savings accounts (HSAs) resemble tax-deferred pension and savings
plans more than flexible spending arrangements; for example, the balance in
an HSA persists from year to year, while that in a flexible spending
arrangement must be spent on qualified expenses by the end of the year.
Therefore, treat taxfree contributions to an HSA as untaxed income.
67
Savana Cunningham– Dependent Student.
Parents reported as married on the FAFSA.
Taxes for mother is filed has Head of Household (HOH). Father
listed on Verification Worksheet (VW) as did not file.
School asked for taxes filed with a correct marital status.
Savana provided statement that parents filed correctly because
mother is a citizen but father is a nonresident alien.

Can Savana’s mother file as head of household because one
parent is a nonresident alien?
◦ A. No, parents must file taxes correctly like all US citizens.
◦ B. They can file as married but do not have to. HOH is an
acceptable filing status in this situation.
◦ C. Yes, because they cannot file as married due to one parent’s
status as a nonresident alien.
◦ D. Filing status depends on where the father lives.
68

Can Savana’s mother file as head of household because one parent
is a nonresident alien?
◦ B. They can file as married but do not have to. HOH is an
acceptable filing status in this situation.
Publication 17:
A joint return generally cannot be filed if either spouse is a nonresident alien at any time
during the tax year. However, if one spouse was a nonresident alien or dual-status alien
who was married to a U.S. citizen or resident alien at the end of the year, the spouses
can choose to file a joint return. If you do file a joint return, you and your spouse are
both treated as U.S. residents for the entire tax year. For information on this choice, see
chapter 1 of Publication 519.
If you are a U.S. citizen married to a nonresident alien you may qualify to use the head of
household tax rates. Although your nonresident alien spouse cannot qualify you as a
head of household
If your spouse was a nonresident alien at any time during the year and you do not
choose to treat your nonresident spouse as a resident alien, then you are treated as
unmarried for head of household purposes. You must have another qualifying relative
and meet the other tests to be eligible to file as head of household.
Nonresident Alien Tax Filing Links:
◦
◦
◦
http://www.irs.gov/publications/p17/ch02.html#d0e8306
http://www.irs.gov/Individuals/International-Taxpayers/Taxation-of-Nonresident-Aliens
http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad---Head-of-Household
69
Shawn Brown –
Independent
Single
No Children

What is the amount
Shawn reports as
“income earned
from work” on the
FAFSA?
◦
◦
◦
◦
A.
B.
C.
D.
114,941
107,324
89,086
110,684
62% answered correctly
70

What is the
amount Shawn
reports as “income
earned from work”
on the FAFSA?
◦ B. 107,324
Common Errors –
• Subtracting Business
Income
• Taking figure from Total
Income line
• Including Rent, Estate, or
Social Security as wages
71


Customized verification – DCL ID: GEN-12-11 (7/17/12)
Verification Tracking Flags
◦ Appearing on ISIR






V1
V2
V3
V4
V5
–
–
–
–
–
Standard Verification
SNAP Verification
Child Support Verification
Custom Verification
Aggregate Verification
New Items
◦ High School Completion Status
 (1) High School Diploma
 (2) Recognized Equivalent of a High School Diploma
 (3) Home School Document
◦ Identity/Statement of Educational Purpose
 An applicant must appear in person and present the following documentation to an
institutionally authorized individual to verify the applicant’s identity—
 A valid government-issued photo identification,
 A signed statement certifying that the Federal student financial assistance received
will only be used for educational purposes to pay the cost of attending that
institution for the 2013–2014 award year.
 An institution must maintain, an annotated copy of the identification submitted by
the applicant.
Source – Federal Register/Vol. 77, No. 134 - 7/12/12
72
V1 - Standard Verification Group
Tax Filers

Adjusted Gross Income

U.S. Income Tax Paid

Untaxed Portions of IRA Distributions or Pensions

IRA Deductions and Payments

Tax Exempt Interest Income

Education Credits

Number of Household Members

Number in College

Supplemental Nutrition Assistance
Program (SNAP-Food Stamps)

Child Support Paid
Non-Tax Filers Income Earned from Work

Number of Household Members

Number in College

Supplemental Nutrition Assistance
Program (SNAP-Food Stamps)

Child Support Paid
V2 - SNAP Verification Group

Supplemental Nutrition Assistance Program (SNAP-Food
Stamps)
V3 - Child Support Paid Verification Group

Child Support Paid by the student (or spouse), the
student’s parent, or both
V4 - Custom Verification Group

High School Completion Status

Identity/Statement of Educational Purpose

Supplemental Nutrition Assistance
Program (SNAP-Food Stamps)

Child Support Paid
V5 - Aggregate Verification Group

High School Completion Status

Identity/Statement of Educational Purpose
Tax Filers

Adjusted Gross Income

U.S. Income Tax Paid

Untaxed Portions of IRA Distributions or Pensions

IRA Deductions and Payments

Tax Exempt Interest Income

Education Credits

Number of Household Members

Number in College

Supplemental Nutrition Assistance
Program (SNAP-Food Stamps)

Child Support Paid
Non-Tax Filers

Income earned from work

Number of Household Members

Number in College

Supplemental Nutrition Assistance
Program (SNAP-Food Stamps)

Child Support Paid
Source – DCL ID: GEN-12-11 - 7/17/12
http://ifap.ed.gov/dpcletters/GEN1211.html
73

Suggested Bookmarks:
◦ e-CFR – TITLE 34--Education
 http://ecfr.gpoaccess.gov/cgi/t/text/textidx?c=ecfr&tpl=/ecfrbrowse/Title34/34cfr668_main_02.tpl
◦ Application and Verification Guide
 http://ifap.ed.gov/fsahandbook/1213FSAHandbookAVG.html
◦ Information for Financial Aid Professionals (IFAP)
 http://www.ifap.ed.gov/
◦ Publication 17 – Your Federal Income Tax
 Tax Guide for Individuals http://www.irs.gov/pub/irs-pdf/p17.pdf
 IRS Forms and Publications http://www.irs.gov/formspubs
◦ Tax Transcripts
 http://www.irs.gov/faqs/faq/0,,id=199557,00.html
◦ ED - Program Integrity Questions and Answers – Verification
 http://www2.ed.gov/policy/highered/reg/hearulemaking/2009/verifi
cation.html
◦ Online review of conflicting information policies
 http://ifap.ed.gov/qadocs/FSAVeriModule/activity1verif.doc
74
Thank you for
attending!
Any Questions??
you for attending!
Contact Information:
Any Questions??
JoEllen Soucier – [email protected]
978-895-0639
www.proed.org
75

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