Getting the tax info needed to complete FAFSA
Tuesday, November 10, 2020
2020 has been challenging year for all students and their parents.
Moms and Dads with K-12 kiddos have been doing double (or more) duty as teachers where schools have shifted to full or hybrid remote classes as a coronavirus pandemic precaution.
It's not much easier when the youngsters are older. Many young adults who've been away at college or were looking forward to going are back or still at home, taking classes via computer. They and their parents are not happy about COVID-19 causing them to miss the full university experience.
They're also not happy about the still-high costs of higher education, even when online lesson plans mean the students aren't on campus full-time.
Those higher ed expenses coupled with COVID-19 income losses are an added financial strain on families.
That's why if you have a child in or heading to college, you need to be checking out FAFSA.
Getting needed educational aid: FAFSA, the awkward acronym for the Free Application for Federal Student Aid, is how students and their parents apply for financial help from the federal and state governments, as well as institutions of higher learning.
After completing the FAFSA, applicants will hear back (usually within three weeks, but often sooner) about their financial aid eligibility. Potential assistance is in the form of grants, scholarships, student employment options and student loans.
Timing of applications: To get this financial help, you need to fill out a FAFSA within the application period. And academic year application periods can overlap, notes Kristan Kuchar at SavingForCollege.com.
In her article on which FAFSA to complete, Kuchar explains:
From October to June, there are two versions of the FAFSA available, one for the current academic year and one for the next academic year. During this overlap period, when a student is filing out the FAFSA, there could be confusion on which FAFSA to fill out. Which FAFSA you should complete depends on the academic year for which you are applying for financial aid.
For example, from October 1, 2020 to June 30, 2021, you could be applying for financial aid for either the 2020-2021 academic year or the 2021-2022 academic year.
If you're applying for financial aid for the 2020–2021 academic school year, file a 2020–2021 FAFSA form, which is based on 2018 income tax returns. If you're applying for financial aid for the 2021–2022 school year, you should file a 2021–2022 FAFSA form, which is based on 2019 income tax returns.
Tax year info is key: If you've read this far, you know where I'm going next.
Your tax filings, either as a student or more usually parents of students, are key to your FAFSA application(s).
And they underscore the importance of keeping copies of your annual tax filings. That way they will be handy for things like applying for loans to buy a home or a care or to get help paying for colleges.
But there's also another FAFSA specific way to get this information.
In most cases, by the time that FAFSA must be filled out arrives, most applicants (and/or their parents) have filed their taxes for the year needed to complete the application.
That means they can use the Internal Revenue Service's Data Retrieval Tool (DRT). This imports tax info directly from the IRS to the appropriate entry areas of the online FAFSA.
But you likely will need your tax return copies, too, as well as the applicable tax year Form W-2 to finish up the FAFSA, according to FederalStudentAid.gov's 7 Things You Need Before Filling Out the 2020–21 FAFSA® Form.
Getting your old tax data: That's why, even though this post's focus is FAFSA, this Tax Form Tuesday's focus is on the ways that you can get your necessary higher education tax data to complete the document.
First off, of course, is the DRT that will, as noted, automatically fill in much of the tax info needed on FAFSA.
For the remaining information, if you didn't keep copies of your own returns, you can order them from the IRS.
Getting an actual copy of your Form 1040 and all the attachments you filed is more difficult. Plus, it'll cost you.
You must fill out Form 4506, Request for Copy of Tax Return, then mail it to the address listed in the instructions, along with a $43 fee for each tax return you want.
Note the words "each tax return." It's 43 bucks for every actual copy you order.
And be ready to wait. The IRS says it could take up to 75 days for your request to be processed.
Transcripts work well: This is why most folks request, and lending institutions (including those providing college aid) are happy to accept, a tax return transcript.
This is a computer printout from the IRS of the information entered on the return you filed. The IRS offer various transcript types free of charge.
You also can request a transcript online at IRS.gov's Get Transcript page. It takes at least 10 days from your request for you to get the transcript, but that is a much quicker turnaround than for an actual return copy.
If you're getting ready to tackle FAFSA, make sure you have all the financial data, including tax info, you'll need. Or be ready to gather it using one (or more) of the options just discussed.
And good luck, not only on getting financial help to pay for college, but also in actually getting back to school, at all levels, IRL.
I'm keeping my fingers crossed for the just-reported vaccine success to pan out quickly and for the new Biden Administration to implement COVID-19 containment plans that will get us — students and we folks well beyond campus days — back to some version of our pre-pandemic lives soon.
You also might find these items of interest:
- Tax transcript tips for students filing a FAFSA
- Don't miss the tax break for college textbooks
- Make paying for college a family affair, with contributions from parents, kids and Uncle Sam
Sam, this article from SavingForCollege.com looks at how investment figure into FAFSA: https://www.savingforcollege.com/article/are-investments-factored-into-financial-aid-on-the-fafsa
Also, just a regular transcript for the tax year you need info from should be fine. Use the IRS Get Transcript online tool (link is in the post). No need to pay for an actual Form 1040 copy.
Good luck on getting financial aid and enjoy school!
Posted by: Kay | Wednesday, November 11, 2020 at 06:14 PM
Also, what is the best tax transcript to order for FAFSA/schools?
Posted by: Sam | Wednesday, November 11, 2020 at 05:25 PM
thank you for this timely info. I went to studentaid.gov and tried to follow the steps. The site advises to check what is and is not considered an investment (assets) for parents and students, but the links are dead. Do you know where to get this info?
Posted by: Sam | Wednesday, November 11, 2020 at 05:20 PM
This is a very good article. Thanks for sharing it.
Posted by: Britney Jones | Wednesday, November 11, 2020 at 01:43 AM