IRS Data Retrieval and Verification Spring 2012

1. IRS Data Retrieval and VerificationSpring 2012

2. Today’s Agenda IRS Data Retrieval and Verification • What’s New? • Who Can and Cannot Use the IRS Data Retrieval Tool? • How Does It Work? • What if the IRS Data Retrieval Tool Can’t Be Used? • Verification Related Information • Closing Thoughts

3. What Has Changed? IRS Data Retrieval and Verification • Regulations now require that tax information come directly from the IRS. • The U.S. Department of Education and the IRS have collaborated to: • make the process easier • result in more accurate information • Using the IRS Data Retrieval Tool, which was available under limited circumstances in the past, is strongly recommended and easy to use. • If applicants do not use the IRS Data Retrieval Tool, they may be required to obtain an official tax transcript from the IRS. • Obtaining a tax transcript requires extra steps and will result in processing being delayed.

4. What Has Changed? IRS Data Retrieval and Verification • We continued to recommend that applicants file their FAFSAs early using estimated income information. • Meeting school priority deadlines is critical! • Once taxes have been filed, applicants will need to go back to fafsa.gov to update income and tax information. • The federal government will begin sending reminders to update income and tax information in April. • If applicants file their FAFSA after they file their taxes, they may be able use the IRS Data Retrieval Tool initially. • Schools differ in the message they are sending students regarding the use of the IRS Data Retrieval Tool.

5. Who Can Use the IRS Data Retrieval Tool? IRS Data Retrieval and Verification • To use the IRS Data Retrieval Tool, you must meet all of the following criteria: • Have valid SSN • Have filed a 2011 federal tax return (within the time frames below) • NOT have changed marital status since December 31, 2011 • Have a PIN (although they can apply for one as part of the process) • It takes up to 1-2 weeks for IRS income information to be available if you filed your tax return electronically and 6-8 weeks for paper IRS tax filers.

6. Who Cannot Use the IRS Data Retrieval Tool? IRS Data Retrieval and Verification • Students or parents who meet any of the following criteria will not be able to use the IRS Data Retrieval Tool: • Parents with all zeroes for SSN • Any student or parent with a marital status date of January 1, 2012 or later • Any student or parent who indicated on the FAFSA they have not already filed a tax return or will not file a tax return. • If the student or parent are married and filed as “Married Filing Separately” or “Head of Household”. • The applicant, parent, or spouse, as applicable,have filed an amended tax return • Parents or students who file a foreign or Puerto Rican tax return

7. How Does it Work? IRS Data Retrieval and Verification • The following demonstration will assume that income and tax information were originally estimated. • The key trigger to being able to use the IRS Retrieval Tool is indicating on the FAFSA that taxes are “Already Completed”. • Start by going to the FAFSA website at www.fafsa.gov

8. How Does it Work? IRS Data Retrieval and Verification • Log into the FAFSA

9. How Does it Work? IRS Data Retrieval and Verification • Click on “Make FAFSA Corrections”

10. How Does it Work? IRS Data Retrieval and Verification • Enter student PIN and establish temporary password

11. How Does it Work? IRS Data Retrieval and Verification • Informational Page

12. How Does it Work? IRS Data Retrieval and Verification • Click on the “Financial Information” tab at the top

13. How Does it Work? IRS Data Retrieval and Verification • The information changes once tax return status is changed to “Already completed: I wouldn’t have been given the option if I had checked the other options

14. How Does it Work? IRS Data Retrieval and Verification • Below I am the parent updating the FAFSA for my dependent student so have to enter the parent PIN:

15. How Does it Work? IRS Data Retrieval and Verification • Now leaving the FAFSA site to go to the IRS site:

16. How Does it Work? IRS Data Retrieval and Verification • Now in the IRS site:

17. How Does it Work? IRS Data Retrieval and Verification • Fill information in exactly as it appears on the tax return and then hit submit:

18. How Does it Work? IRS Data Retrieval and Verification • Important information if you listed a P.O. Box:

19. How Does it Work? IRS Data Retrieval and Verification • Here is what you will see if the tax data can’t be retrieved:

20. How Does it Work? IRS Data Retrieval and Verification • If data is there, here is what you will see:

21. How Does it Work? IRS Data Retrieval and Verification • Here is the bottom half of that same screen: Once box is checked, the “Transfer Now” button can be clicked

22. How Does it Work? IRS Data Retrieval and Verification • Once the transfer button is clicked, the info is transferred to the FAFSA and this is what you will see:

23. How Does it Work? IRS Data Retrieval and Verification • You will be able to see within the FAFSA which questions were updated with data from the IRS:

24. How Does it Work? IRS Data Retrieval and Verification • You will then see the changes that were made (this is the top and bottom of the same page):

25. How Does it Work? IRS Data Retrieval and Verification • Next sign and submit the corrections:

26. How Does it Work? IRS Data Retrieval and Verification • A confirmation page will follow once the FAFSA is submitted. • The updated information will be processed and sent to all of the schools listed on the FAFSA. • If a student is selected for verification, they will still need to complete some additional paperwork. • It is important that they pay attention to all communication from the school(s) and respond quickly.

27. What if the IRS Data Retrieval Tool Can’t Be Used? IRS Data Retrieval and Verification • If the IRS Data Retrieval Tool can’t be used, and the student is selected for verification, tax transcripts will need to be provide to the school. • A tax transcript is obtained directly from the IRS (www.irs.gov) and can be request by phone or ordered online.

28. What if the IRS Data Retrieval Tool Can’t Be Used? IRS Data Retrieval and Verification • Here is how you order a transcript

29. What if the IRS Data Retrieval Tool Can’t Be Used? IRS Data Retrieval and Verification • This will only work if the information is for the first person listed on the tax return:

30. What if the IRS Data Retrieval Tool Can’t Be Used? IRS Data Retrieval and Verification • Most people will need a tax return transcript unless their taxes have been amended (then they should request a tax account transcript):

31. What if the IRS Data Retrieval Tool Can’t Be Used? IRS Data Retrieval and Verification • This is what you see after hitting continue on the last screen:

32. Verification IRS Data Retrieval and Verification • Verification selection is a random process – the federal government selects the students to be verified, but schools can verify additional students. • Verifying tax information is just one piece of the verification process. • Schools will also require selected students to complete a verification form. • Schools can request additional information or require that other forms be completed, especially if there is conflicting information.

33. Verification IRS Data Retrieval and Verification • The federal government defines information that has to be verified including: • Household size and number in college • Income information from nontax filers • Untaxed income (i.e. child support received, worker’s comp, payments to tax deferred pension and savings plans) • Receipt of Food Stamps or SNAP • Child support paid • Schools vary in terms of the documentation they require for verification. • Some schools will require documentation to verify receipt of Food Stamps or SNAP and/or child support paid, while others will consider self-certification sufficient. • Many schools will not provide students with a financial aid award until verification is complete so students should provide requested information as soon as possible.

34. Closing Thoughts IRS Data Retrieval and Verification • This is the first year of full scale use of this tool so there will be unexpected challenges. • For example, we have recently learned that those who owe taxes will not be able to get a tax transcript until May. • New requirements are having a significant impact on schools so try to be patient. • Schools have different requirements and deadlines so make sure students have information from each school they remain interested in attending. • Don’t be afraid to ask questions of the financial aid office! • We’re here to help, too!

35. Questions? IRS Data Retrieval and Verification Finance Authority of Maine 5 Community Drive P.O. Box 949 Augusta, ME 04332 1-800-228-3734 www.famemaine.com education@famemaine.com Mila Tappan – mtappan@famemaine.com