What you need to know about TAXES and Verification

1. What you need to know about TAXES and Verification PS Don’t be Afraid to Ask Presented by: Dr. James Theeuwes Lock Haven University

2. Purpose of Session • Discuss 2012 Verification and what items need verified • Discuss where to find the necessary information • Verification worksheets • 2012 Fafsa • Familiarize participants with the necessary tax forms for doing VERIFICATION • 1040 • W2’s

3. Why We Do What We do • Students sometimes make errors on their application, colleges have procedures for verifying the reported information.” • If your school has conflicting information concerning a student’s eligibility or you have any reason to believe a student’s application information is incorrect, you must resolve the discrepancies before disbursing FSA funds (2010 AVG 81)

4. What We Are and Are Not • While Financial Aid Administrators do not need to be tax experts there are some issues that even a layperson with basic tax law information can evaluate. Because conflicting data often involve such information, FAA’s must have a fundamental understanding of relevant tax issues that can considerably affect the need analysis…” (2010 AVG 107)

5. Verification Items 2012 • All Applicants – this years items • Number in household • Number in college • Food Stamps (SNAP) – if receipt reported on FAFSA • Child support paid – if amount reported on FAFSA

6. Verification Items 2012 • Tax filers – • AGI • Taxes paid • Specific untaxed income items – • Untaxed IRA distributions • Untaxed pensions • Education credits • IRA deductions • Tax exempt interest • Non Tax filers – Income Earned from work

7. Additional Information • Filing status – from the 1040. Note: If married must file either jointly or filing separately, NOT Head of Household. Must resolve inconsistencies • DOE is ‘pushing’ FAFSA filers to use IRS Data Retrieval • If FAFSA applicant doesn’t use IRS data retrieval, must get IRS transcript via IRS Form 4506T-EZ, phone call 800-908-9946, or online.  Transcripts to do not have to be signed by tax payers. • FAFSA applicants are encouraged to use IRS data retrieval.  If applicant populates FAFSA with unaltered IRS data, ISIR IRS Request Flag will = 02 and we don’t have to verify applicant’s taxable income items.

8. Additional Information • Tax Filing Extensions • Obtain a copy of the extension and award aid.  Once tax payer files, get a transcript and make any necessary corrections.  Again, if applicant does IRS data retrieval via FAFSA corrections process and doesn’t alter IRS data, we don’t have to verify taxable income items

9. Tax Forms 1040

10. Tax Forms 1040

11. Tax Forms 1040 EZ

12. Tax Forms- W-2

13. Tax Forms- SCH C

14. Verification Form

15. Verification Form

16. Verification Form Work Sheet

17. FAFSA 2012

18. Resources Resources: www.irs.gov : Forms, publications. www.nasfaa.org : information, bulletins, help www.ifap.ed.gov : Publications, HAND BOOK, much more information

19. TAXES and Verification • Questions?????? • Contact: • jtheeuwe@lhup.edu • 570 484 2153