Does My Tax Return Need to Be Accepted by the IRS Before I File a FAFSA?

Technology just keeps making things easier, including filing tax returns and applying for educational financial aid. Your Free Application for Federal Student Aid, or FAFSA, requires information from your tax return, but you can submit the FAFSA before you complete your return or have it accepted by the IRS. FAFSA applications are accepted any time after Jan 1.

IRS Data Retrieval Tool

The IRS Data Retrieval Tool is a relatively new feature that is integrated into official online FAFSA applications. When you use this tool, information from your tax return is pulled directly from IRS records and placed into your FAFSA. This eliminates errors and saves you from locating a copy of your return and manually entering the information. If you plan on using this tool, your return must be accepted by the IRS before you complete your FAFSA. However, if your marital status changed after Dec. 31, if you are married and file a separate return, or if you filed an amended return, you may not use this tool. The tool is also unavailable for those who use a taxpayer identification number instead of a Social Security number, those who file foreign tax returns and those whose home address shown on the FAFSA form does not match the home address on the tax return.

Entering Return Information Manually

If you’re waiting for your return to be accepted by the IRS, chances are you’ve already submitted it. In this case, you can manually enter your return information into your FAFSA and complete the application before the IRS accepts your return. The FAFSA application will tell you which lines on your return contain the information needed for specific sections of your FAFSA. Just pull up a copy of your return to use this method. If you haven't prepared your return by the time you complete your FAFSA, indicate on your application that you have not filed but will. After your return is accepted, go back to your FAFSA and update it to include your tax return information. If you are eligible to use the Data Retrieval Tool, click on that option and the information from your tax return will flow into your FAFSA.

FAFSA Amendments

If you don’t use the IRS Data Retrieval method, your FAFSA may need to be amended later. You must make changes to your application if the figures recorded by the IRS after your return is accepted don’t match the figures shown on your application. This can happen if the IRS requires changes to your return for it to be accepted. You may also need to make changes to your FAFSA if you amend your tax return and the changes create an increase or decrease in your adjusted gross income.

Verification Review

Verification reviews occur most often when data you submit on your FAFSA don’t match information in the IRS system. However, verification reviews may also occur randomly. If your file is selected for verification, you’ll need to provide copies of your tax return and an official IRS tax return transcript to verify your financial data. If information you provide on the FAFSA is inconsistent with information the IRS has on file for you, your financial aid package may change. The best way to avoid data inconsistencies is to wait until your return is accepted and use the IRS Data Retrieval tool.

About the Author

With a background in taxation and financial consulting, Alia Nikolakopulos has over a decade of experience resolving tax and finance issues. She is an IRS Enrolled Agent and has been a writer for these topics since 2010. Nikolakopulos is pursuing Bachelor of Science in accounting at the Metropolitan State University of Denver.

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