Students: Beware of FAFSA Tax Return Changes
March 17, 2017 : Mairye Bates
Editor’s Note: Are you a college student or parent of a college student, listen up! There are important FAFSA tax return reporting changes this tax calendar year.
Free Application for Federal Student Aid, or FAFSA, is a standard form that almost all colleges and universities use to obtain information about the financial status of you and your family. Although it sounds akin to lefse, a Norwegian flatbread made with potatoes served at a Norwegian holiday dinner, the FAFSA is actually a key part of the process for obtaining financial aid for college. With this information, they can make an offer of financial aid for education.
There are some big changes coming.
First, the timing and due dates are changing. The 2017-2018 FAFSA was available on Oct. 1, 2016. Previously, the first date for submission was January, so this allows the application to go in three months sooner than the past due dates. This change is permanent, and so all future years will have an Oct. 1 submission date.
The FAFSA requires information from your tax return.
And this is the biggest change – which tax year to use for the application. If you’ve done the FAFSA before, you may have run into this problem: The FAFSA application period (formerly) opened on Jan. 1, but the information requested was from the tax forms that weren’t due until April. This caused problems for many families, who had to rush to gather the tax return and FAFSA submitted, or they used estimates, and had to update later.
But here’s exciting news! The new process now uses the tax data from the previous year, instead. So, for the 2017-2018 FAFSA, the information will come from the 2015 tax returns, rather than from the 2016 returns that people are doing now.
But, that’s not as good for me and my family. We made more money in 2015…maybe I’ll get less aid!
That’s ok, you can still talk to your college financial aid office, and let them know about your situation. They expect that some people will have different situations, and they are prepared to consider that.
Why the Change?
Well, for many people, this should make the process simpler. First, you’ll now have completed tax forms to work from, rather than estimates. Which means that more people will be able to automatically import the data using the IRS Data Retrieval Tool (IRS DRT). Less typing and more accurate data could mean less stress for you.
The earlier submission data may give you and your college more time to plan for your person financial aid situation. As always, though, it’s best to get the forms filed as soon as you can. Some schools have first come, first served policies for financial aid, and filing early could save your place.
If you haven’t filed your 2017-2018 FAFSA, you should do so as soon as you can. If you haven’t already filed your 2015 Federal income taxes, you will need to complete them. A tax professional at H&R Block is a great resource for any questions or assistance needed. And of course, they can help with your 2016 returns, which will be due by April 18, 2017. You’ll be using those for next year’s FAFSA (2018-2019) which can be submitted beginning Oct. 1, 2017.
For more information on FAFSA tax return changes, visit www.irs.gov.