{"id":21436,"date":"2020-10-07T08:00:14","date_gmt":"2020-10-07T13:00:14","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=21436"},"modified":"2020-10-06T10:09:44","modified_gmt":"2020-10-06T15:09:44","slug":"facing-the-fafsa","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/tax-law-and-news\/facing-the-fafsa\/","title":{"rendered":"Facing the FAFSA"},"content":{"rendered":"

College application season is underway. As high school seniors agonize over those all-important college essays, parents across the country are facing their own paperwork challenge: the Free Application for Federal Student Aid<\/a> (FAFSA).<\/p>\n

KEY POINT:<\/b> The FAFSA application is not just for families that expect to qualify for federal assistance. It\u2019s also used to apply for state aid, and colleges and universities typically require the FAFSA to apply for institutional student aid.<\/p>\n

Taxes and the FAFSA<\/b><\/p>\n

The FAFSA requires a plethora of information from the prospective college student \u2014 and from their parents if the student is a dependent.<\/p>\n

KEY POINT:<\/b> Dependent student status is not the same as dependency status for tax purposes. For the 2021\u20132022 academic year, a prospective student will be considered a dependent if they were born on or after Jan. 1, 1998, unless certain exceptions apply. These include, for example, if the child is married, working toward a master\u2019s or doctorate degree, or currently serving in the military.<\/p>\n

Assuming a child is a dependent student, the FAFSA requires identifying and financial information from the student and parent. This information includes information on savings, investments, and untaxed income, as well as all-important tax data.<\/p>\n

Tax data change<\/b><\/p>\n

Historically, the FAFSA form required information from the immediate prior tax year. However, for the 2021\u20132022 FAFSA, parents and students will need to enter tax data from their 2019 returns. This switch to reporting tax information from an earlier tax year makes it easier for parents and students to complete the form, since the required returns will have already been filed. In fact, tax information can be input directly into the FAFSA form using a handy IRS tool.<\/p>\n

The IRS Data Retrieval Tool<\/a> (DRT) can import tax information into the online FAFSA form directly from the tax returns on file with the IRS. The imported information will not show up on the FAFSA form; instead, \u201cTransferred from the IRS\u201d will appear in the appropriate fields.<\/p>\n

The Department of Education (DOE) cautions, however, that not everyone can use the data retrieval tool. This may be the case, for example, if either parents or students did not file a 2019 return because their income was below the filing threshold or filed an amended return for 2019.<\/p>\n

Automatic inputting of tax information also won\u2019t work if the marital status of a student\u2019s parents has changed since the 2019 return was filed. The DOE offers these instructions:<\/p>\n