Estimating Taxes for the FAFSA
The Free Application for Federal Student Aid (FAFSA) must be completed every year by students who wish to be considered for federal and state aid. Because federal and state funds are provided on a first-come, first served basis, you and your child need to complete the FAFSA as soon as possible after January 1 of the year for which aid is needed.
Most schools have financial aid priority deadlines in February and March. These early deadlines can make it difficult for some families to have their Federal Income Tax Returns (required for the FAFSA) completed in time. Because of this, the FAFSA allows families to estimate income and tax information.
How to Estimate Taxes
If you or your student's income has not changed in the past year, the easiest way to estimate your taxes is to just use last year's tax information. If family income has slightly changed, use these steps to estimate taxes:
- Take the line item from your federal income tax return entitled, "This is your total tax."
- Divide this number by your adjusted gross income.
- Multiply by your estimate of this year's adjusted gross income to obtain an estimate of your tax refund or payment.
You can also search for a website that has a free tax estimator, such as TurboTax Estimator.
After Filing Taxes
Once you and your child file taxes, he should make corrections to his FAFSA. To make corrections online, your child will need to have a PIN number. He can also make corrections via his Student Aid Report (SAR).
Selected for Verification
If your child gets notification that his FAFSA has been selected for verification, don't panic. Most FAFSAs that contain estimated tax information are selected for verification. Be sure to read any messages from the Department of Education appearing on the Student Aid Report. Submit any forms that the Financial Aid Office requests, which will probably include copies of your and your student's federal income tax returns and W-2 wage earning statements. Do not turn in any documentation that was not requested. For example, if you turn in too many tax schedules and it shows information that the FAFSA has not asked for, the Financial Aid Office will be obligated to use that additional information in calculating need. Only turn in what is requested.
If you have any questions about estimating taxes for the FAFSA or being selected for verification, contact the Financial Aid Office at your child's school.
Posted: 12/12/2007