1. MASFAA 2013 October 6 th – 9 th, 2013 Indianapolis, Indiana Tax Transcripts and Verification Requirements Tara Piantanida-Kelly, USA Funds

2. Tax Transcripts and Verification Requirements [insert event name]

3. Program Integrity Questions and Answers Verification

4. Program Integrity Questions and Answers Verification

5. Program Integrity Questions and Answers Verification

6. Program Integrity Questions and Answers Verification

7. IRS.gov

8. Agenda  Required Verification Items.  Customized Verification Process.  Acceptable Documentation.  IRS Tax Transcripts.  Comparison of Tax Return and Tax Transcript Data.

9. 2013-2014 Required Verification Items 1 Additional required items:  Adjusted gross income.  U.S tax paid.  Untaxed IRA distributions.  Untaxed pensions.  Education credits.  IRA deductions.  Tax-exempt interest income. Additional required item:  Income earned from work. No Non-income related items for certain applicants selected for verification:  Household size.  Number in college.  Child support paid.  SNAP.  High school completion.  Identity/educational purpose. Yes Was or will a federal income tax return be filed?

10. Agenda  Required Verification Items.  Customized Verification Process.  Acceptable Documentation.  IRS Tax Transcripts.  Comparison of Tax Return and Tax Transcript Data.

11. Customized Verification Process  Applicants selected for verification will be categorized into groups and identified by Verification Tracking Flags. Verification Tracking Groups and Required Information 1-2 Verification Tracking Flag Group Name V1Standard V2SNAP Verification Group V3Child Support Paid Verification Group V4Custom Verification Group V5Aggregate Verification Group

12. Customized Verification Process Summary of Tracking Group Requirements 3 Required to be Verified Verification Tracking Group V1V2V3V4V5 X X X X X X XX X X X X X X X X X X Household size Number in college Child support paid SNAP (Food Stamps) High school completion Identity/educational purpose Income/tax data

13. Agenda  Required Verification Items.  Customized Verification Process.  Acceptable Documentation.  IRS Tax Transcripts.  Comparison of Tax Return and Tax Transcript Data.

14. Acceptable Documentation 4-11 Non-Income Related ItemsNon-Tax FilersTax Filers Without Special Circumstances Tax Filers With Special Circumstances

15. Acceptable Documentation Non-Income Related Items 4-5

16. Tax Data What FAAs are Required to Know 6  Whether a person was required to file a tax return.  What the correct filing status for a person should be.  An individual cannot be claimed as an exemption by more than one person.

17. Acceptable Documentation Tax Filers Without Special Circumstances 7 AGI U.S. Tax Paid Untaxed IRA Distributions Untaxed Pensions Education Credits IRA Deductions Tax-Exempt Interest  No documentation required if tax filer: –Used Data Retrieval Tool and did not alter data.  Tax transcript is required if tax filer: –Did not use DRT; –Used DRT but altered data. OR

18. Acceptable Documentation Tax Filers With Special Circumstances 7-8  Tax transcript;  W-2 Form(s) if joint-filer no longer is married to individual on the return. ‒ Only required for filer whose income was used to calculate the EFC. ‒ If self-employed or W-2 form not available, school may accept a signed statement which includes:  Amount and source of income, and reason W-2 form is not available. AND Tax Filers Who Filed a Joint Return but Now Are Separated, Divorced, Widowed or Remarried

19. Acceptable Documentation 2012 W-2 Form 8-9 38805.19 3165.73 41180.901729.60 41180.90597.12 2375.71 E X 38805.192400.02

20. Acceptable Documentation Tax Filers With Special Circumstances 10 Tax Filers Granted a Tax Filing Extension by the IRS  Copy of IRS Form 4868 or approval of extension longer than six months; *An applicant’s U.S. taxes paid will come from Line 4 of the IRS Form 4868.

21. Acceptable Documentation Tax Filers With Special Circumstances 10 Tax Filers Granted a Tax Filing Extension by the IRS AND  Copy of IRS Form 4868 or approval of extension longer than six months;  Documentation of income: –Copy of W-2 Form(s); * An applicant’s AGI will come from Box 1 of the W-2 Form.

22. Acceptable Documentation Tax Filers With Special Circumstances 10 Schools have option of collecting tax data once return is filed. Income information must be re-verified when tax data is received. Tax Filers Granted a Tax Filing Extension by the IRS AND OR  Copy of IRS Form 4868 or approval of extension longer than six months;  Documentation of income: –Copy of W-2 Form(s); ‒ If self-employed, a signed statement certifying AGI and tax paid.

23. Acceptable Documentation Individuals for Whom a Tax Transcript Cannot be Provided or Located 11

24. Acceptable Documentation  Amended Returns – Form 1040X: Tax Filers With Special Circumstances

25. Agenda  Required Verification Items.  Customized Verification Process.  Acceptable Documentation.  IRS Tax Transcripts.  Comparison of Tax Return and Tax Transcript Data.

26. IRS Tax Transcripts  Tax Return Transcript: –Provides most line items found on a tax return. –Does not reflect changes made after filing.  Tax Account Transcript: –Provides information on financial status. –Reflects changes made after filing. 12

27. IRS Tax Transcripts Requesting Tax Transcripts 12, 35-36 Request Method Where? Tax Transcript Output Document What?How?When? Direct to Third Party? Online www.irs.govPaperMailed5-10 daysNo Telephone (800) 908-9946PaperMailed5-10 daysNo IRS2Go Mobile App www.irs.govPaperMailed5-10 daysNo IRS Form 4506T-EZ www.irs.gov/pub/ irs-pdf/f4506tez.pdf PaperMailed5-10 daysYes

28. Guidance  When a school receives both unaltered tax data and a tax return transcript from an applicant: –All corrections must be made if any item on the tax transcript differs by $25 or more from the amount reported on the FAFSA. Receipt of Unaltered Tax Data and a Tax Transcript 12

29. Agenda  Required Verification Items.  Customized Verification Process.  Acceptable Documentation.  IRS Tax Transcripts.  Comparison of Tax Return and Tax Transcript Data.

30. Comparison of 2012 Tax Return and Tax Transcript Data 13-30  Hunter Davis: –IRS Form 1040EZ. –Tax transcript.  Elizabeth Moore: –IRS Form 1040A. –Tax transcript.  Ethan and Miranda James: –IRS Form 1040. –Tax transcript.

31. Comparison of 2012 Tax Return and Tax Transcript Data 13 23, 25 Red Cross-reference to tax return line items.

32. Comparison of 2012 Tax Return and Tax Transcript Data 13 23, 25 YellowItems required for verification.

33. Comparison of 2012 Tax Return and Tax Transcript Data 13 23, 25 Blue Items to review for potential conflicting information.

34. Challenges with Tax Transcripts Potential Conflicting Information – Wages Earned 25 Wages earned:Line 7 + 12 + 18

35. Challenges with Tax Transcripts Potential Conflicting Information – Wages Earned 28

36. Challenges with Tax Transcripts Potential Conflicting Information – HSAs 26

37. Challenges with Tax Transcripts Potential Conflicting Information – Eligible to File a 1040A/EZ? 43

38. Challenges with Tax Transcripts Potential Conflicting Information – Eligible to File a 1040A/EZ? 47

39. Challenges with Tax Transcripts Taxable Scholarship and Fellowship Income 14 SCH 2,000

40. Challenges with Tax Transcripts Taxable Scholarship and Fellowship Income 16

41. Challenges with Tax Transcripts Rollovers ROLLOVER $6,473.00 6,473.00  Form 1040:  Tax transcript:

42. Agenda  Required Verification Items.  Customized Verification Process.  Acceptable Documentation.  IRS Tax Transcripts.  Comparison of Tax Return and Tax Transcript Data.