2019-2020 Verification and Changes for 2020-2021 FASFAA Region V Fall Workshop Broward College – A. Hugh Adams Central Campus November 8, 2019
Topics • Whose application must be verified • Verification tracking groups and FAFSA information to be verified • Acceptable documentation • Policies and procedures
Verification • Process of verifying accuracy of Free Application for Federal Student Aid (FAFSA) data • Regulations define: – Whose application must be verified – FAFSA information to be verified – Documentation used to verify data elements • Regardless of verification selection, must always resolve discrepancies and conflicting information
Verification Selection Process • Customized approach • Data elements selected each award year • FAFSA information that must be verified: – Will vary from applicant-to-applicant – May be information that is not used in calculating applicant’s expected family contribution (EFC)
Verification Tracking Groups • For 2019–20, Central Processing System (CPS)-selected applicants are assigned to one of three verification tracking groups (V1, V4, and V5) • Same data elements as for 2018-19 award year • Each tracking group determines items to be verified and required documentation
Tracking Group Reassignment • Can move from V1 or V4 to V5 - Impacts which aid must be adjusted or returned (subsidized and/or unsubsidized) • See October 31, 2016 Electronic Announcement, Changes in Verification Tracking Groups
2019-2020 Verification Tracking Groups
Auto Zero EFC - Dependent Verify only: Parent’s AGI, if tax filers (V1, V5) Parent’s income earned from work, if nontax filers (V1, V5) Student’s high school completion status and identity/Statement of Educational Purpose (V4, V5)
Auto Zero EFC - Independent Verify only: Student’s/spouse’s AGI, if tax filers (V1, V5) Student’s/spouse’s income earned from work, if nontax filers (V1, V5) Number of household members (V1, V5) Student’s high school completion status and identity/Statement of Educational Purpose (V4, V5)
2019-2020 Verification Documentation Requirements
Verification Documentation IRS Data Retrieval Tool (IRS DRT) data elements already verified if IRS Requested Flag in “02” - Does not matter what IRS Data Flags are If no “02,” Tax Return Transcript or acceptable alternative transcript is required - Extremely limited exceptions exist
IRS DRT Cannot Be Used When... Tax return not yet filed Married independent × × student and spouse Puerto Rican or foreign × filed separate tax (non-U.S.) tax return returns filed Married parents filed × Taxes filed × separate tax returns electronically within last 3 weeks Married and filed taxes × as head of household Taxes filed by mail × First 3 digits of SSN are within last 11 weeks × “666” Parents are unmarried × and living together Neither married parent × has a valid SSN Change in marital × status after end of tax Both parents entered all × year and before filing zeros for SSN FAFSA Conflict between marital × and tax filing status
Tax Return Transcript Can be requested: – IRS Get Transcript Online – IRS Get Transcript by Mail – 1-800-908-9946 – Mail or fax IRS Form 4506-T or 4506 T-EZ – Income Verification Express Service
Acceptable Alternative IRS Tax Transcripts • Record of Account Transcript • Return Transcript for Taxpayer (RTFTP) • Tax Return DataBase View (TRDBV) transcript • Any other IRS tax transcript that includes all of the income and tax information required to be verified - IRS Tax Account Transcript or Information Returns Processing Transcript Request – Wages (IRPTR-W) alone are not acceptable for federal verification
Acceptable Alternative IRS Tax Transcripts • Effective beginning with the publication of the January 9, 2019 Electronic Announcement and applicable to the 2018-2019 FASFA processing and verification cycles and beyond, the institution may accept as acceptable documentation a SIGNED copy of the income tax return for the applicable tax year that the tax filer submitted to the IRS or relevant tax authorities to verify FAFSA/ISIR income and tax return information. • This includes using a SIGNED income tax return to complete verification for amended tax filers and victims of identity theft. (see Federal Register notice published on May 24, 2019)
Redacted Tax Transcripts • Effective September 2018, IRS began redacting (hiding) certain personally identifiable information (PII) • The following information will be provided on the new transcript: Last 4 digits of any SSN listed on the transcript: XXX-XX- 1234 Last 4 digits of any EIN listed on the transcript: XX-XXX- 1234 Last 4 digits of any account or telephone number First 4 characters of the last name for any individual First 4 characters of a business name First 6 characters of the street address, including spaces All money amounts, including all data required to complete verification (AGI, taxes paid, etc.)
Redacted Tax Transcripts • Can create a 10 – digit Customer File Number Cannot be taxpayer’s SSN Could be student ID Can be added to 4506-T or 4506T-EZ when requesting tax transcript Will appear on tax transcript to match it to applicable student, spouse or parent • Spring 2019 – only mailed to IRS address of record • See 10/4/2018 Electronic Announcement
DRT Items The following items are imported from IRS forms 1040, 1040A and 1040EZ to a student’s FAFSA via the DRT: • Type of tax return filed • Filing Status • Adjusted Gross Income (AGI) • Taxes paid • Income earned from work • Exemptions In addition, the following are also imported from the 1040 and 1040A forms but not the 1040EZ: • Education credits • IRA deductions • Tax-exempt interest income • Untaxed IRA distributions • Untaxed Pensions
V1– Tax Filers • Adjusted Gross Income • U.S. Income Tax Paid • Untaxed Portions of IRA Distributions • Untaxed Portions of Pensions • IRA Deductions and Payments • Tax Exempt Interest Income • Education Credits
Nontax Filers - Income Earned From Work U.S. Individuals: • Statement or verification worksheet; • Form W–2 from each employer; and • IRS Verification of Nonfiling Letter (except dependent student) Foreign Residents: • Wage and Tax Statement or equivalent • Statement or verification worksheet; and • Verification of Nonfiling from tax authority (except dependent student)
Nontax Filers – Verification of Nonfiling • Based on dependency status • Only required if selected for verification • IRS Verification of Nonfiling Letter or other confirmation of nonfiling from relevant tax authority is required: - For a dependent student, each parent who did not file a tax return - Independent student and spouse if nontax filer • Not required from dependent student except when: - Conflicting information exists - Tax extension filed
Nontax Filers – Verification of Nonfiling • Don’t request unnecessarily • Required even no work and zero income • Can be requested in only 2 ways: - IRS Get Transcript Online Tool - Submitting IRS Form 4506-T (check box 7)
Nontax Filers – Verification of Nonfiling All nonfilers, including dependent students, selected for verification also must provide: • Signed verification worksheet or written statement from each nonfiler certifying for the tax year: - Individual has not filed and is not required to file a tax return - Sources and amounts of income earned from work • Copy of W-2 or equivalent document for each source of employment income
Verification of Nonfiling Alternatives • Any IRS document indicating: -“no record of return filed” - “no transcript on file” - IRS has no record of a tax return for the tax year • U.S. residents who are not required to file tax and do not have and cannot get: - Social Security Number (SSN) - Individual Taxpayer Identification Number (ITIN); or - Employer Identification Number (EIN)
Verification of Nonfiling Alternatives • Individuals who are not U.S. citizens or residents, including spouses or parents of dependent students living in other countries • Refer to: - Documents Acceptable for Completing Verification in webinar handout - AskRegs Knowledgebase Q&A, Are There Exceptions or Alternatives to Collecting a Verification of Nonfiling Letter? • No other alternatives exist at this time
Tax Extensions • Automatic 6-Month Extension • Beyond Automatic 6-Month Extension for: - Serving in a combat zone or a qualified hazardous duty area - Living outside of the U.S. - Living in a federally declared disaster area - Needing an extension to pay U.S. estate or generation-skipping transfer taxes - Other limited reasons
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