If you dislike having to input your IRS tax financial information on a FAFSA application (Free Application for Federal Student Aid), this task has become considerably easier. There is an IRS Retrieval Tool on the FAFSA website www.fafsa.gov that allows applicants and parents to transfer their income information directly from the IRS to the FAFSA which increases the accuracy and verification of the information submitted. All applicants who indicate they have filed a federal tax return will be directed to use the IRS tool. If an applicant chooses not to use the Tool, the applicant will be contacted by FAFSA to explain why the income information submitted on the application is more accurate than the information available from the IRS.
To use the tool, the applicant must have filed a federal tax return for the immediate preceding year, possess a valid Social Security number, have a Federal Student Aid PIN, and have not changed marital status since Dec. 31 of the prior year. If the parents filed as married filing separately or if an amended tax return was filed, this Tool will not be available.
Students can begin to submit their FAFSA applications beginning January 1. The IRS expects its FAFSA IRS Tool to be available as of February 1. March 1 is the FAFSA priority funding consideration deadline. Since applicants are encouraged by FAFSA to get their applications submitted ASAP, applicants should seriously consider e-filing their returns as their tax information will be available within 2 weeks of e-filing. If a paper return is filed with the IRS, the data will be available within 6-8 weeks.
While this Tool will make the completion of the FAFSA application much easier, one significant challenge apparently was not addressed by FAFSA. How does an applicant complete the FAFSA application on a timely basis when important tax documents needed by the parents have yet to be received by the March 1 due date? Brokerage firms that issue 1099s and partnerships that issue K-1s historically send these forms to their clients and investors at a date that makes meeting the March 1 date very challenging. Applicants will likely need to prepare the application based on the best financial information available to the applicant indicating that they intend to use the IRS Tool when their tax return is filed. The applicant will receive an email directing them to use the IRS Tool to update their income information once they have filed their current year federal income tax return.
If a FAFSA application is selected for verification, applicants can use the tool to update their income information and avoid unnecessary delays. If the IRS Data Retrieval Tool cannot be used and if the college requests verification documentation, it may be necessary to obtain an official transcript form the IRS. To order this, visit http://irs.gov and select Order a Transcript or call the toll-free line at (800) 908-9946.
A brief tutorial regarding this tool can be found at: http://http://www.calstatela.edu/univ/finaid/pdf/FAFSA%20IRS%20Data%20Retrieval%20Tool.pdf
