fafsa on the web, irs data retrieval, & verification msfaa lansing, mi february 1, 2012

FAFSA ON THE WEB, IRS DATA RETRIEVAL, & VERIFICATION

MSFAALansing, MIFebruary 1, 2012

FAFSA ON THE WEB2

FAFSA PROCESSING Increase in applications completed by

independent students is nearly double the increase of applications completed by dependent students.

Applications by independent students in 2011-2012 have increased nearly 70% when compared to 2010-2011 rates

Applications by dependent students are up 37% this year over last.

Nationally, applications have increased by 12% for families whose income level is greater than $41K, compared to an increase of 7% for families whose income level is less than $41K.

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FOTW COMPLETION TIME

38%

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2012-13 WEB DEMONSTRATION SITE

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• FAFSA on the Web and FAA Access demonstration sites available To access sites, go to http://fafsademo.test.ed.gov Enter:

User Name: eddemo Password: fafsatest

• Click on FOTW or FAA Access to CPS Online Demo System button

• Available through December 2012

An Alerts and Message text provides the status of the search

Search results display name, city, state, and school code for each matching school

Scrollable results display as many as 100 schools per page

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Students select schools from those that display and then select the “ADD” button between the two tables.

The student can also select the Remove hyperlink to remove any school from the listing.

2012-2013 HOUSING PLAN ERROR MESSAGING

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2012-2013 HIGH SCHOOL QUESTION

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High school question (Question 27) will display using the following logic: High school completion status = 1 (high school

diploma) and Grade level = 0 or 1 Any student who was presented the high school

question in 2011-2012 will be presented the question again in 2012-2013 as a renewal student.

The student will have the opportunity to search the database with the “best match” search functionality to verify the response that was provided in 2011-2012.

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Results for this high school search include any school name in the database which contains “Bishop”, may be located in Baltimore or in the state of Maryland.

This is an example of relevance as those names containing Bishop appear before those containing city or state.

Students may narrow their search by changing the search criteria.

FAFSA GENDER QUESTION EDIT

2012-13 While the gender question is not required,

it is used to determine which applicants need to be matched with the Selective Service

To provide an extra reminder to applicants, a warning edit will display in FOTW if the question is not answered

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ASSET THRESHOLD QUESTION

2011-2012

Comment codes are used to notify schools when the asset threshold question was displayed to the applicant and the response is “No”

2012-2013

Comment codes deleted

Response to asset threshold question provided on ISIR record layout, Student Inquiry, and ISIR Compare

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WHO SEES ASSET THRESHOLD QUESTION? Independent students and parents of dependent

students that Are not eligible for automatic zero or Simplified

Needs Test ANDReport state of legal residence that allows skip

logic for income and assetsMI – does allowOH – does not allowMN – does not allowWI – does not allowIL – does not allowIN – does allow

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HOMELESS YOUTH DETERMINATION

Financial Aid office may determine that student meets homeless youth definition

Students who meet this criteria can use FOTW to set the Special Circumstances Flag to ‘3’

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HOMELESS YOUTH DETERMINATION

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IRS DATA RETRIEVAL16

IRS DATA RETRIEVAL1

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IRS Data Transferred between January 30, 2011 & July 2011•Initial FAFSA -- 2,617,428•FAFSA Corrections -- 334,306

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IRS DATA RETRIEVAL2011-2012 FOTW relies on the applicant’s

determination of whether the IRS DRT should be used

2012-2013 FOTW will include logic to make the determination for the applicant

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FOTW CONFIRMATION PAGE Upon submission, reminds students that

the IRS data retrieval option is the preferred method of providing tax information and is available through Corrections on the Web

Customized messaging displays – When student and/or parent was eligible

to use the IRS data retrieval and did not OR

When student and/or parent indicated “Will file taxes”

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2012-2013 IRS DRT FILTERING QUESTIONS

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The student and parents, when applicable, are required to respond to the following filtering question.Check all that apply or check None of the Above. My tax filing status is Married Filing Separately My tax filing status is Head of Household I filed an amended tax return I filed a Puerto Rican or foreign tax return I recently filed my taxes None of the above

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2012 – 2013 IRS DRT LOGIC2

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The “My tax filing status is Married Filing Separately” and “My tax filing status is Head of Household” options are displayed only when the students or parents, when applicable, are married.

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DYNAMICALLY DISPLAYED IRS DRT MESSAGING

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• If an applicant selects recently filed my taxes, he/she will still have the option to use the IRS DRT, although it is discouraged if it has been fewer than two weeks.

• Message: “If you filed your taxes electronically within the last 2 weeks or if you filed your taxes by mail within the last 8 weeks, your tax information may not be available yet from the IRS. You can determine if you should attempt to access your tax information from the IRS at this time.”

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DYNAMICALLY DISPLAYED IRS DRT MESSAGING

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An applicant will receive the message, “Based on your response, you are not eligible to transfer your information from the IRS into this FAFSA.”

Those who select “None of the Above”, would be encouraged to use the tool. Message: “Based on your response, we

recommend that you transfer your information from the IRS into this FAFSA. “

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TWO NEW IRS DATA FLAGSFOR 2012-2013

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Eligible Filer Notifications Students and parents who were eligible to

use the IRS data retrieval and did not will receive e-mail notification

E-mails will be sent beginning on 04/01/12 Subsequent messages sent every 45 days

until mid-September, and then every 60 days until the end of cycle

IRS Data Retrieval

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NEW IRS DRT NOTIFICATIONS

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Two types of IRS DRT email notifications to encourage certain applicants, and their parents, to use the Tool.

Estimated Tax Filer – Sent to an applicant/parent who responded that he/she “Will File” taxes. Encourages use of the Tool after filing taxes.

Actual Tax Filer – Sent to applicant/parent who indicated that the tax return was “Completed” and the individual was eligible to use the IRS DRT but (1) chose not to use it or (2) used it but chose not to transfer data.

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VERIFICATION36

WHAT IS VERIFICATION? Process whereby certain information

provided on the FAFSA is reviewed for accuracy and completenessSelected Title IV recipientsOnly specific ISIR data elements

668.51 thru 668.61 – Subpart E

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TAX INFO YOU MUST KNOW

Married couple files separate tax returns and both filed as “head of household”IRS allows if spouses lived apart for the

last 6 months of calendar year Not including separation due to business, military service, medical care, school

Student and parent both claimed student as tax exemption

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TAX INFO YOU MUST KNOW

ISIR says “I’m not going to file.” and gross income meets IRS minimumsThat’s conflicting information!

http://www.irs.gov/pub/irs-pdf/i1040.pdf scroll to page 8

ISIR will have reject 20 with comment 126 or 131

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EFFECTIVE DATE OF VERIFICATION REGULATIONS Effective July 1, 2012 for 2012-13 award

year

Remember 12/13 FAFSA processing has already begun!

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VERIFICATION - DEFINITIONS Subsidized student financial assistance

programs Eligibility uses EFC Verification applies Pell, FSEOG, FWS, Perkins, Direct Subsidized

Loan Unsubsidized student financial assistance

programs Eligibility does not use EFC Verification does not apply Direct Unsubsidized Loan & PLUS Loan TEACH Grant

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VERIFICATION - DEFINITIONS

Use “FAFSA information” instead of “application”

Specified year The calendar year preceding the first

calendar year of an award year, i.e. the base year, or the year preceding the base year

Applicant responsibilityApplicant must provide specified

documents or information if requested by Secretary or institution 42

VERIFICATION SELECTION CPS applies risk model to FAFSA data

Goal is to target verification based upon most error prone data items specific to an applicant

Non-selected applicants are again subject to risk model when submitting corrections

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VERIFICATION SELECTION

ISIR Flags & Comment Codes Verification Flag

Y - Selected for verification N - Not selected for verification* - Selected on a subsequent transaction

Verification Selection FlagBlank – corrected transaction not selectedY - corrected transaction now selected &

transaction being corrected was not selected

Comment Codes170 & 171

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VERIFICATION SELECTION2012-13

• Institutions must verify all applicants selected by CPS for verification- Removes institution’s option to

verify only 30% of applicant pool

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2012-13 VERIFICATION & FAFSA CORRECTIONS

• For subsidized programs, all changes resulting from verification must be submitted to CPS if change is - To any nondollar item or- A single dollar item of $25 or more

• If required to submit one change, must submit all changes

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REQUIRED VERIFICATION ITEMS2012-13 Regulation eliminates five required verification

items ED will publish Federal Register Notice each

award year listing possible verifiable items and acceptable documentation

SAR/ISIR will specify required verification items for individual applicant

Institution may verify additional items for an applicant

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2012-13 REQUIREDVERIFICATION ITEMSFrom the 2011 tax return

Adjusted gross incomeU.S. income tax paidUntaxed IRA distributionsUntaxed PensionsEducation creditsIRA deductionsTax Exempt Interest

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ACCEPTABLE DOCUMENTATION

For items on 2011 tax returnInformation obtained through IRS data

retrieval on FOTW IRS Request Flag value of 02

ORA tax transcript obtained from the IRS

See DCL GEN-11-13

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TAX TRANSCRIPT SAMPLE

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TAX TRANSCRIPT SAMPLE

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2012-13 REQUIREDVERIFICATION ITEMS

Not on tax returnNumber in householdNumber in collegeFood stamps – Supplemental Nutrition

Assistance Program (SNAP)Child support paid

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ACCEPTABLE DOCUMENTATION

Number in household Signed statement

• Includes name, age, and relationship to applicant

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EXCEPTIONS TO HOUSEHOLD SIZE VERIFICATIONFor dependent student when parents marital

status is-– separated or unmarried (single, divorced, or

widowed) and family size on the FAFSA = 2– married and family size on the FAFSA = 3

For independent student who is-– separated or unmarried (single, divorced, or

widowed) with the family size on the FAFSA = 1

– married and the family size on the FAFSA = 255

ACCEPTABLE DOCUMENTATION

Number in collegeSigned statement

Name and age of each household member who is/will attend eligible postsecondary educational institution as at least a half-time student in the 2012–2013

Name of the eligible institution(s) that each household member is or will be attending during the 2012–2013

Not required if applicant is only member in college

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ACCEPTABLE DOCUMENTATIONFood Stamps - Supplemental Nutrition Assistance Program (SNAP)

- if receipt is indicated on the 2012-13 FAFSA

Documentation from the agency that issues the Food Stamps benefit or alternative documentation as determined by the institution to be sufficient to confirm that the applicant received benefit in in 2010 or 2011

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ACCEPTABLE DOCUMENTATION

Child Support Paid - if reported on the 2012-13

FAFSAStatement signed by child support payor-

Amount of child support paidName of the person to whom child

support was paid andName of the children for whom child

support was paid

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TAXPAYER HAS IRS EXTENSIONFor 2012-13Verification is complete if you have --

– Documentation of IRS extension for tax year 2011 &

– 2011 W-2 Forms or statement from self-employed individual

School may require an individual granted a tax filing extension to provide a copy of their completed and signed tax return when filed

If school receives a copy of the return, it MUST verify AGI and taxes paid

If school does not receive copy, may return all funds disbursed

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VERIFICATION & PROFESSIONAL JUDGMENT

For 2012-13 Codifies policy that all applicants selected

for verification must complete verification before any PJ adjustments to FAFSA or cost of attendance are made Refers to HEA section 479A(a)

Statement must be included in school’s written policies and procedures about verification

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UPDATING FOR MARITAL STATUSFor 2012-13 you may require

updating due to change in applicant’s marital status if institution determines update is necessary to address inequity or accurately reflect ability to pay andStudent is selected for verification ORMarital status change results in

dependency status change 61

VERIFICATION & INTERIM DISBURSEMENTS

For 2012-13• Interim disbursements may be made

without receipt of corrected ISIR if completed verification makes no change to aid eligibility • However all required corrections must

be submitted to CPS and school must receive revised ISIR transaction

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VERIFICATION COMPLETED AFTER ENROLLMENT ENDS

In 2012-13, student no longer limited to lesser Pell award if verification completed after enrollment ends

Student would receive Pell payment based upon correct EFC

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IRS EXTENSION

You must verify with documentation of IRS extension and W-2 Forms or statement from self-employed individual School may require an individual granted a

tax filing extension to provide a copy of their completed and signed tax return when filed

- If school receives a copy of the return, it MUST verify AGI and taxes paid

If school does not receive copy, may return all funds disbursed

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TAX RETURN PREPARER

For 2012-13, clarifies that tax returns submitted with preparer signature (wet, stamped, typed or printed) with the name and address of the preparer must also have their SSN, EIN, or PTIN

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FUTURE VERIFICATION In the future, the ISIR will indicate

Whether an applicant has been selected for verification, and

Specific item or items that must be verified

But . . . we’re not there yet . . .2013-14 will

Serve as transition yearBe a “hybrid” of the current and future

verification selection processes66

2013-14 CUSTOMIZED VERIFICATION

Like current process, applicant data will be subjected to risk model on 01 transaction

Three categories of selectionTargeted selection - data meets a risk criteria

and record is selected for “targeted” verificationDiscretionary selection - data does not meet

risk criteria for targeted selection, but is selected to verify a non-targeted data element

Combination of targeted and discretionary selection

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2013-14 ISIRISIR would include

Verification Flag (Y, N, *)Fields for all FAFSA data elements subject to

verification for a given year (per FR notice)Verification codes for each of those data

elements indicating verification selection statusY = Data element selected for verificationN = Data element not selected for verificationV = Data element selected for verification, but student transferred data using the IRS data retrieval tool and did not change it 68

2013-14 SAR

Will tell students that they were selected, but will not indicate the specific fields that need to be verified

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SUBSEQUENT TRANSACTIONSVerification selection would generally occur on

initial (01) transactions onlyCorrections that are processed after selection

would continue to be flagged as selectedIf the student was not selected for verification

on initial (01) transaction, selection status would not change based on a correction, unless one of the following occursStudent’s dependency status changesEligibility for Auto Zero EFC is lost

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SUBSEQUENT TRANSACTIONS

If one of these conditions is met on a correction-CPS will apply risk model to corrected

FAFSA informationIf applicant meets a risk criteria, will be

selected for verification on the resulting correction transactionVerification flag set to YFAFSA data elements to be verified identified on ISIR

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SUBSEQUENT TRANSACTIONS

Sometimes, data elements subject to verification will change from one transaction to another Dependency status changes Tax filing status changes Student/Parent changes any data items

retrieved from IRS Student become eligible/ineligible for

Automatic Zero EFC In these cases –

Verification flag would remain YNew verification tracking flag = RReset verification indicators for appropriate

data elements (Y, N, V)72

SUMMARY OF CUSTOMIZED VERIFICATION Verification selection will generally occur

on 01 transactions only Some applicants will get selected for

verification on subsequent (02 or higher) transactions but should be small number

CPS will determine which FAFSA data elements must be verified for individual students

Specific data elements requiring verification for each transaction will be communicated on ISIR

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FAFSA INFO NOT RELATED TO VERIFICATION

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WHO IS A PARENT ON THE FAFSA? ONLY biological or adoptive parents Not legal guardians Not foster parents Step-parents must be included if

Currently married to biological or adoptive parent

Not married to biological or adoptive parent but has legally adopted student

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FAFSA HOUSEHOLDSiblings of dependent student are included

in the parents’ household ifParent will provide more than 50% of

support for sibling during award yearORSibling would be dependent if filed FAFSA

Foster children are not in the household and foster payments are not income

Independent Student’s boyfriend/girlfriendOnly if student provides more than 50% of

support for friend and will do so during award year

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TIDBITSIn-kind support is not untaxed income

on FAFSAExamples – support other than money

FoodClothingLiving rent-free

Federal law defines marriage as legal union of man and womanSame-sex couples cannot be married

on the FAFSA77

CONFLICTING INFORMATIONRequires that the institution

“communicates to the individual designated to be responsible for administering Title IV, HEA programs, all the information received by any institutional office that bears on a student’s eligibility for Title IV, HEA program assistance

668.16(f)78

CONFLICTING INFORMATIONDevelops and applies an adequate

system to identify and resolve discrepancies that the institution receives from different sources with respect to a student’s application for financial aid under Title IV, HEA programs

Applies to ALL Title IV recipients and any information that affects Title IV aid eligibility

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WHAT IS NOT CONFLICTING INFORMATION? Household size differs from number of

tax return exemptions Dependent under IRS rules vs.

Department definition of dependent Assumptions made by CPS FAFSA filed using estimated income W-2 Box 14 Tax filer claimed multiple or conflicting

credits Secondary INS confirmation successful

but student has expired INS document 80

QUESTIONS????

Jamie A. Malone

Training Officer

U.S. Department of Education

312-730-1528

jamie.malone@ed.gov

What did she say????

I was thinking

Hmm

m

…

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PLEASE PROVIDE ANY COMMENTS REGARDING THIS TRAINING OR THE TRAINER TO:

Jo Ann BorelTitle IV Training Supervisorjoann.borel@ed.gov202-377-3930

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