Applying for Financial Aid
Use your 2007 Tax Forms
Your financial aid can be delayed if you incorrectly file your IRS tax forms (1040, 1040A, 1040EZ, etc.). In an effort to avoid this, please read the following information before preparing your tax forms.
The US Department of Education issued new guidance on what financial aid administrators are expected to know when reviewing federal tax returns and resolving conflicting information related to tax issues that may affect a student’s eligibility for Federal Student Financial Aid. The Financial Aid Office cannot award or disburse financial aid to a student if a conflict exists between the FAFSA, verification documentation and tax returns required for verification.
Financial aid administrators are required to verify the following tax information, if it conflicts with other documentation submitted to the school by the student:
- Whether or not an individual was required to file a tax return based on reported earnings
- What an individual's correct filing status should be (single, married filing joint, married filing separate or head of household)
- That an individual is not claimed as an exemption by more than one person.
Examples of Conflicting Information
Example 1 - Earned Income
Wage earners of $8,200
(Single), $16,400 (Married Filing Joint) or $3,200 (Married
Filing Separate) who do not file a tax return are considered to
have submitted conflicting information. The financial aid
administrator must take necessary action to resolve the
conflict. This may include requesting documentation verifying
that the individual was, indeed, not required to file under IRS
rules, or a copy of the actual tax return once the individual
has filed it.
Example 2 - Marital Status
Married parents of a
dependent student, or married independent students who have both
filed separate tax returns using the "Head of Household" filing
status are considered to have conflicting information. Because
an individual can obtain a higher tax deduction if filing using
the Head of Household status, the result of both parents doing
so could significantly impact the student's expected family
contribution (EFC).
Therefore, if married parents, or married independent students, file Head of Household the financial aid administrator must verify several factors noted in IRS Publication 17, including the following:
- The married filers must have resided in different households during the tax year, or
- The divorced filers must have been unmarried on the last day of the tax year
- That certain "qualifying individuals" must have lived in the home with the head of household filer for the tax year, and
- The filer must have provided more than half the support for the "qualifying individuals"
- The filer must have paid more than half of the costs of maintaining a home for the tax year
It is required that the financial aid administrator request whatever documentation he or she deems necessary to resolve the conflict. The financial aid administrator might also find that the only resolution would be a re-filing by the taxpayer to correct the filing status.