Taxable Income and the Verification Process
July 13, 2021 The U.S. Department of Education announced on that it will waive verification requirements for students selected for standard FAFSA verification for the 2021-22 enrollment cycle. Students selected for other verification groups will still need to provide information. The change, intended to ease the challenges students and institutions are experiencing because of the pandemic, means that fewer low-income students will have to provide additional proof that their financial information is accurate when the IRS Data Retrieval was not used.
Every year, the U.S. Department of Education selects a percentage of financial aid applicants for verification. It is a process to ensure program integrity and confirm that information on the Free Application for Federal Student Aid (FAFSA) is an accurate snapshot of your finances. It is a process of due diligence to ensure the right assistance is awarded to the right students. Being selected for the verification process can be frustrating but the Financial Aid Office is here to help. Please feel free to contact our office if you have any questions or concerns.
Selected for Verification? Here is how Taxable Income can be Verified
IRS Data Retrieval within the FAFSA
The best way to verify income is by using the IRS Data Retrieval Tool that is part of FAFSA on the web. If the student has not already used the tool, go to FAFSA.gov, log in to the student’s FAFSA record, select “Make FAFSA Corrections,” and navigate to the income section of the application. Follow the instructions to determine eligibility to use the IRS Data Retrieval Tool and transfer 2018 IRS income tax information into the student’s FAFSA. The tax filing status should reflect "Already Filed.’’
IRS Tax Transcript
If unable to use IRS Data Retrieval, to obtain an IRS Tax Transcript, go to the IRS website and click on “Get Transcript Online.” Make sure to request the “IRS tax return transcript” and not the “IRS tax account transcript.” You will need a Social Security number (SSN) or Individual Tax Identification Number (ITIN) to register an account. Both the IRS Tax Transcript and W-2 forms can be submitted to the Financial Aid Office.
IRS Paper 1040 Tax Returns
If unable to access the tax transcript using IRS “Get Transcript Online” due to the absence of a personal account number from a credit card, mortgage, home equity loan, or car loan, students and families can provide one of the following:
Signed Dependent Verification Worksheet, sections B and/or C, item 1. Select the third option along with a signed photocopy of a 1040 tax return filed with the IRS and W-2 form(s) to the Financial Aid Office.
Signed Independent Verification Worksheet, sections B, item 1. Select the third option along with a signed photocopy of a 1040 tax return filed with the IRS and W-2 form(s) to the Financial Aid Office.
If you have already submitted the Verification Worksheet you have the option of revising it or providing the Financial Aid Office a typewritten statement from the student and/or parent with this reason reflected along with a signed photocopy of a 1040 tax return filed with the IRS and W-2 form(s).