tax transcripts and verification requirements
DESCRIPTION
Tax Transcripts and Verification Requirements. Tara Piantanida-Kelly, USA Funds. Program Integrity Questions and Answers. Verification. Program Integrity Questions and Answers. Verification. Program Integrity Questions and Answers. Verification. Program Integrity Questions and Answers. - PowerPoint PPT PresentationTRANSCRIPT
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MASFAA 2013October 6th – 9th, 2013Indianapolis, Indiana
Tax Transcripts and Verification Requirements
Tara Piantanida-Kelly, USA Funds
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Program Integrity Questions and AnswersVerification
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Program Integrity Questions and AnswersVerification
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Program Integrity Questions and AnswersVerification
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Program Integrity Questions and AnswersVerification
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IRS.gov
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Agenda
Required Verification Items. Customized Verification Process. Acceptable Documentation. IRS Tax Transcripts. Comparison of Tax Return and Tax Transcript Data.
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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?
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Agenda
Required Verification Items. Customized Verification Process. Acceptable Documentation. IRS Tax Transcripts. Comparison of Tax Return and Tax Transcript Data.
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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
V1 Standard
V2 SNAP Verification Group
V3 Child Support Paid Verification Group
V4 Custom Verification Group
V5 Aggregate Verification Group
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Customized Verification ProcessSummary of Tracking Group Requirements
3
Required to be VerifiedVerification Tracking Group
V1 V2 V3 V4 V5
X
X
X
X
X
X
X X
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
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Agenda
Required Verification Items. Customized Verification Process. Acceptable Documentation. IRS Tax Transcripts. Comparison of Tax Return and Tax Transcript Data.
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Acceptable Documentation
4-11
Non-Income Related Items
Non-Tax Filers
Tax Filers Without Special Circumstances
Tax Filers With Special Circumstances
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Acceptable DocumentationNon-Income Related Items
4-5
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Tax DataWhat 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.
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Acceptable DocumentationTax 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
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Acceptable DocumentationTax 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
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Acceptable Documentation2012 W-2 Form
8-9
38805.19 3165.73
41180.90 1729.60
41180.90 597.12
2375.71EX
38805.19 2400.02
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Acceptable DocumentationTax 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.
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Acceptable DocumentationTax 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.
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Acceptable DocumentationTax 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.
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Acceptable DocumentationIndividuals for Whom a Tax Transcript Cannot be Provided or Located
11
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Acceptable Documentation
Amended Returns – Form 1040X:
Tax Filers With Special Circumstances
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Agenda
Required Verification Items. Customized Verification Process. Acceptable Documentation. IRS Tax Transcripts. Comparison of Tax Return and Tax Transcript Data.
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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
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IRS Tax TranscriptsRequesting Tax Transcripts
12, 35-36
Request Method Where?
Tax Transcript Output Document
What? How? When?Direct to
Third Party?
Online www.irs.gov Paper Mailed 5-10 days No
Telephone (800) 908-9946 Paper Mailed 5-10 days No
IRS2Go Mobile App www.irs.gov Paper Mailed 5-10 days No
IRS Form 4506T-EZ www.irs.gov/pub/irs-pdf/f4506tez.pdf Paper Mailed 5-10 days Yes
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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
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Agenda
Required Verification Items. Customized Verification Process. Acceptable Documentation. IRS Tax Transcripts. Comparison of Tax Return and Tax Transcript Data.
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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.
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Comparison of 2012 Tax Return and Tax Transcript Data
1323, 25
Red Cross-reference to tax return line items.
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Comparison of 2012 Tax Return and Tax Transcript Data
1323, 25
Yellow Items required for verification.
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Comparison of 2012 Tax Return and Tax Transcript Data
1323, 25
Blue Items to review for potential conflicting information.
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Challenges with Tax TranscriptsPotential Conflicting Information – Wages Earned
25
Wages earned: Line 7 + 12 + 18
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Challenges with Tax TranscriptsPotential Conflicting Information – Wages Earned
28
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Challenges with Tax TranscriptsPotential Conflicting Information – HSAs
26
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Challenges with Tax TranscriptsPotential Conflicting Information – Eligible to File a 1040A/EZ?
43
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Challenges with Tax TranscriptsPotential Conflicting Information – Eligible to File a 1040A/EZ?
47
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Challenges with Tax TranscriptsTaxable Scholarship and Fellowship Income
14
SCH 2,000
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Challenges with Tax TranscriptsTaxable Scholarship and Fellowship Income
16
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Challenges with Tax TranscriptsRollovers
ROLLOVER
$6,473.00
6,473.00
Form 1040:
Tax transcript:
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Agenda
Required Verification Items. Customized Verification Process. Acceptable Documentation. IRS Tax Transcripts. Comparison of Tax Return and Tax Transcript Data.