1. Jim Briggs The Tax Detective

2.  2015 Tax Filing Thresholds  Tax Filing Statuses & Foreign Tax Filers  IRS Data Retrieval and Tax Transcripts  Federal Verification & PPY  Q&A

4.  IRS Publication 17 – Your Federal Income Tax  IRS Publication 970 – Tax Benefits for Education  IRS Publication 3 – Armed Forces Tax Guide  IRS Publication 519 – US Tax Guide for Aliens

18.  Are there questions on: ◦ Tax filing thresholds? ◦ Tax filing status ◦ Non-resident and resident alien taxation?

20.  Families selected for verification and who are not eligible or did not use IRS Data Retrieval must submit: ◦ An appropriate IRS Tax Return Transcript(s) or ◦ Foreign Tax Return Transcript (if available & free) or ◦ Signed Copy of foreign tax return or ◦ Signed Copy of 1040X and tax transcript or ◦ In “rare” cases a paper copy of US tax return

21.  Provides Prompts for completion of “earned income” questions.  Automatically adds as untaxed income: ◦ Line (15a-15b) IRA distributions ◦ Line (16a-16b) Pension/Annuity distributions ◦ line 25 (Health Savings Account) ◦ Line 28 (SE Retirement contributions) ◦ Line 32 (IRA contributions)  Families prompted by ED to use IRSDRT

22.  Filed a Foreign tax return  Married filing separately  Change in marital status after 12/31/XX

23.  02 – The only code that is valid for verification  Correcting rollovers on lines 15 or 16 will trigger a change from 02 and require a signed return noting roll-over or a transcript or statement indicating a roll-over.  Correcting “earned income” data will not change the code from 02.

24.  IRS DRT typically available within 10 business days of processing of the tax return.  If unable to use DRT: ◦ Submit acceptable IRS transcript:  “tax return” transcript or  “record of account” transcript  IRSDRT will minimize conflicting information from change to PPY

25.  Are there questions on IRS Data Retrieval?

26.  Provided by the IRS free of charge  Available for processing by IRS: ◦ 3 weeks after filing for E-filed returns* ◦ 8-11 weeks after filing for paper filed returns*  Paper transcript should arrive within 5-10 business days after it is available for processing  * Per DCL Gen 14-05

27.  Tax Return Transcript – reports what is on ORIGINAL tax return.  Tax Account Transcript – reports some information for the year. (NOT USEFUL FOR FINANCIAL AID)  Record of Account – reports all original and corrected data for the year (only available using 4506-T-EZ or 4506-T)

28.  Parent or student E-filed – but transcript NOT available. Possible cause: ◦ Federal Tax returns filed before the filing deadline with an unpaid balance due are not “processed” by the IRS until the earlier of:  the filing deadline has passed (April 15th) or  the tax has been paid (perhaps)

29.  IRS URL for Transcripts: ◦ http://www.irs.gov/Individuals/Get-Transcript  Must establish an account: ◦ SSN or ITIN ◦ Date of Birth ◦ EXACT Street Address as used on tax return ◦ Postal Zip Code ◦ Security Questions

30.  The IRS tax transcript database was hacked in 2015 and direct access to transcripts was suspended ◦ All transcripts ordered online will be sent to the address shown on the latest 1040 series return filed by the taxpayer. ◦ Use 4506-T to have transcripts sent to a different address (Need a persons name - if to a school)

31.  Line 28 – Tentative Tax Per Computer  MINUS  Line 36 – Total Credits Per Computer  = TAXES PAID

32.  Line 56 – Income Tax After Credits Per Computer  Minus  Line 46 – Excess Advance Premium Tax Credit Repayment Verified Amount  = Taxes Paid

33.  Ignore recomputed amounts per instructions in EA 03-23-16. See below: ◦ Note that beginning with 2015 a line may appear on some IRS Tax Return Transcripts that says “RECOMPUTED PER COMPUTER”. The amount on this line should be ignored for purposes of verification.

34.  Any questions on IRS tax transcripts?

37. To verify income information, tax filers who filed an income tax return with a taxing authority in a U.S. territory (Guam, American Samoa, the U.S. Virgin Islands) or commonwealth (Puerto Rico and the Northern Mariana Islands) or with a foreign central government, must submit a copy of a transcript of their tax information to the institution if a transcript is available at no charge from that jurisdiction’s taxing authority. A signed copy of the applicable 2015 income tax return that was filed with the taxing authority is only acceptable if tax filers are unable to obtain a free copy of a transcript of their tax information.

39. Residents of the Freely Associated States (Republic of the Marshall Islands, the Republic of Palau, the Federated States of Micronesia), and a U.S. territory or commonwealth or a foreign central government who are not required to file an income tax return under that taxing authority’s rules must submit a copy of their Wage and Tax Statement (or equivalent documentation) for each source of employment income received for 2015 and a signed statement identifying all of the individual’s income and taxes for 2015.

40.  Must be tax related identity theft – not financial (bank, credit card, etc.) identity theft.  IRS unit called Identity Specialized Protection Unit (IPSU). 800-908-4490 or online account.

41.  What income verification documents are required from a victim of tax identity theft? ◦ A TRDBV transcript AND ◦ A signed statement from the individual indicating they are the victim of tax identity theft and that the IRS has been informed.  Updated 7/7/2015 Program Integrity DOC- Q&A 27

42.  What is required to verify the financial income of a parent or student who has filed an federal tax extension?  Schools must collect: ◦ IRS form 4868 (Extension Request) &  Copies of all W-2 forms and/or  Signed statement of AGI and taxes paid for self- employed individuals

43.  Are schools required to have families updated FAFSA information after they have filed their tax returns?  No – a school may require a tax transcript or IRSDRT once the return has been filed – but it is not mandated by the Department. Program Integrity Q&A – Verification (DOC Q&A 16) & 2015-16 AVG P79

44.  The figures on a tax transcript should be used even if the parent or student completed an IRSDRT.  If any “per computer” amount on the tax transcript differs by more than $25 from that on the DRT, the school must submit all changes through the CPS.  Program Integrity DOC- Q&A14

45.  See EA 03-18-16:  Filed a return?  Type of return filed  Filing status  Eligible to file a 1040A  AGI  US Taxes Paid  Exemptions  Income earned from work  Income exclusions  Untaxed Income

46.  See EA 03-18-13: ◦ Dislocated worker? ◦ Number in household ◦ Number in college ◦ Assets ◦ Receipts of certain means-tested benefits

47.  The Department of Education anticipates an increased use of PJ beginning in the 17-18 cycle, when family income has changed substantially from PPY.  Initial guidance on the use of PJ, as it relates to PPY, is provided in DCL GEN 16-03, February 11, 2016.

48. Your NCASFAA Conference Committee and Jim Briggs thank you for your participation.