Do You Need a Tax Return for FASFA?

Students may submit a FAFSA without completing a federal income tax return.

The Free Application for Federal Student Aid, or FAFSA, analyzes the financial circumstances of the student, including income, to determine eligibility for federally subsidized loans and grants, as well as aid provided by states and individual institutions. Most colleges and universities in the United States use the FAFSA to determine the level of financial aid to grant to their students. Although completing a federal tax return is advisable before submitting the FAFSA, it is not required.

Tax Information and the FAFSA

The FAFSA requires the adjusted gross income and the total income tax paid from a completed federal tax return. Other tax-related information that may be required includes combat pay, wages from an educationally-related co-op program, tax-exempt income, work-study earnings and taxable scholarship funds. The FAFSA also information from bank statements, mortgage statements and other bills and financial aid statements from prior years. Parents of dependents students must also provide financial information. Students should also include their driver's license or government-issued ID number and the numeric codes for any schools or institution that should receive the completed FAFSA analysis.

IRS Tax Retrieval Tool

Students and parents who complete the FAFSA online have the option of using the IRS Tax Retrieval Tool. The tool accesses information from the student's or parent's tax returns and populates the appropriate sections on the FAFSA. The tool is designed to minimize errors from using figures from the wrong portion of the federal tax return. However, students and parents must have completed the current year's tax returns to be eligible to use the IRS Tax Retrieval Tool. Students who use a taxpayer identification number instead of a Social Security number, or who have filed amended or foreign tax returns are also advised against using the tool.

Estimating Federal Taxes

Students and parents who have not submitted federal income tax returns may use estimated tax information to complete the FAFSA using the adjusted gross income, or income minus federally-allowed deductions. To estimate tax information for the FAFSA, begin with the figure from the prior year's federal tax return labeled "this is your total tax." Divide that number by the adjusted gross income, then multiply the result by an estimate of the current year's adjusted gross income, eCampusTours.com states. Some online tax services also provide a free tax estimator for easier calculations. Once the student or parents file the current year tax returns, file a correction to the FAFSA or the Student Aid Report.

Completing the FAFSA without a Federal Tax Return

Students and parents who are not required to file a federal tax return should indicate their non-filing status on the FAFSA. They will need to supply income information from W2 forms, 1099 forms or other income statements to supply income information for the relevant sections of the FAFSA, according to StudentAid.gov. Enter the number 0 for items that do not apply, rather than leaving sections blank.

References

• StudentAid.gov: Instructions for Questions 80-91 (How to Complete the Income Tax Section)
• eCampusTours.com: Estimating Taxes for FAFSA
• eCampusTours.com: IRS Data Retrieval Tool for FAFSA
• FAFSAOnline.com: Student Tax Information Required
• FAFSAed.gov: What documents do I need to fill out a FAFSA?
• College Loan Consultant: FAFSA Online Application and Federal Tax Return Forms

Resources

• TurboTax: Free Tax Calculator
• StudentAid.gov: Completing the FAFSA
• SallieMae: Completing the FAFSA
• Northwest University: Tips on Completing the FAFSA
• StudentAid.gov: Federal Student Aid Forms
• Get Ready for College: Tips for Completing the FAFSA
• IRS.gov: Definition of Adjusted Gross Income
• FAFSA on the Web: 2010 - 2011 Worksheet
• FAFSA on the Web: 2011 - 2012 Worksheet