verification. a verification funny “i told a student we needed his independent verification...
TRANSCRIPT
Verification
A Verification Funny
“I told a student we needed his Independent Verification Worksheet and his IRS tax form. My front desk person got a laugh when the student called to see if we’d received his Declaration of Independence and his 10-W-40!”
Federal Verification Topics Definition and background. Resolving inconsistencies. School’s required policies. Required verification items. Documentation requirements.
Federal Verification Topics Finalizing the verification process. Verification “tolerance.” Verification blunders. Some “not so easy”
case studies.
Verification Defined Process of proving the accuracy of
information reported on the FAFSA. Summarized as a review of the base-
year income information on FAFSA.
Purpose of Verification To resolve or correct information
mistakenly reported on the FAFSA. To deter the reporting of false or
fraudulent information. Above all, to assure that eligible
applicants receive the correct types and amount of financial assistance.
Verification 30 percent of
FAFSAs submitted are selected by the CPS.
School must follow federal procedures to collect and verify necessary documentation.
Verification Required only for certain applicants. Schools may verify the application
information of any student. Such students are subject to the same
verification requirements as CPS-selected students.
School selection criteria should be applied fairly and consistently.
Verification versus Resolving Inconsistencies The requirement to resolve conflicting
data is separate and distinct from the verification requirements. School must have system in place to
identify and resolve conflicting information.
School cannot disburse aid until discrepancies are resolved.
Tax Knowledge Who is required to file a tax return. What is the correct tax filing status. Person cannot be claimed as a
dependent twice.
No assets, but have income from assets.
Required School Policies Deadlines for documentation
submission and consequences of the failure to meet those deadlines.
Method of notifying students of award changes due to verification.
Required correction procedures for students.
Required School Policies Means of publicizing requirements and
procedures. Standard procedures for referring
overpayment cases to U.S. Department of Education.
Written Requirements Documentation.
Documents and information needed.
Student Responsibilities. Includes deadlines, consequences of
missing deadlines and correction procedures.
Notification Methods. How the school will notify students of award
changes and time frame for such notification.
Five Required Verification Items
Household size. Number enrolled in college. Adjusted gross income (AGI). US income tax paid. Certain untaxed income and benefits.
Note: School may choose to verify any other items.
Documentation Requirements
Federal Verification Worksheet. School may use verification worksheet.
Not required - May create your own. Most schools use federal worksheet.
School may also require other documentation.
Sample worksheets on pages 12-15.
Household Size Includes any persons
who are dependents of, or who receive more than half of their support from, the head of the student’s household (either the student or the student’s parents).
Documentation: Verification worksheet or signed statement.
Household Size Cases when verification is not required:
Student’s SAR/ISIR document is received by school within 90 days of the date application was signed.
Verified HH Size Last Year = This Year’s HH Size.
Household Size Cases when verification is not required:
Dependent student . Married Parents and HH Size = 3. Single Parent and HH Size = 2.
Independent student: Married and HH Size = 2. Single and HH Size = 1.
Number Enrolled in College Always include student. Parents are excluded unless included via
professional judgment. Others may be included if:
Part of the household size. Attending a post-secondary (Title IV aid-
granting) institution at least half-time. Seeking a degree or credential.
Number Enrolled in College Documentation: Verification worksheet
or signed statement. Signed statement may be combined with
household size statement.
If school doubts enrollment information reported, it should require additional supporting documentation.
Number Enrolled in College Cases when verification is not required:
Student’s SAR/ISIR is received by school within 90 days of the date application was signed.
Number in College = 1 (only the student). All members in the household are enrolled
at the same institution and the school can verify this with its own records.
AGI and Tax Paid Most common documentation = signed
copy of federal tax return. Many ways to file taxes.
Using traditional paper forms. Electronically (e-file).
Tax documents needed for verification vary depending on filing method.
AGI and Tax Paid If tax returns are unavailable:
Can accept any IRS form that lists tax account information. IRS Letter 1722. RTFTP - computerized tax return summary by
IRS Regional Service Centers. Other IRS tax account summaries.
Verification requirements for tax-filing extensions. W-2 forms. IRS approval of request for tax-filing
extension. Copies of federal tax returns when filed.
AGI and Tax Paid
AGI and Tax Paid
AGI and Tax Paid Not reported for non-filers.
Must verify income earned from work. Verification worksheet. Signed statement certifying non-filing status
and sources and amounts of income . W-2 forms.
AGI and Tax Paid The Department now requires financial-
aid administrators to “have a fundamental understanding of relevant tax issues that can considerably affect the need analysis.”
Untaxed Income
and Benefits Social Security benefits. Child support. IRA/Keogh deductions. Foreign income exclusion. Earned income credit. Interest on tax-free bonds.
Untaxed Income and Benefits
Except for child support, can be verified on tax return or alternative tax documents.
Can be reported on the verification worksheet.
Untaxed Income and Benefits
Non-filers should submit verification worksheet or signed statement.
School must verify all other untaxed income on tax returns and W-2s.
Untaxed Income and Benefits
In-kind income that should not be reported on the FAFSA nor verified: Food stamp program. Food distribution program. National school lunch and school breakfast
programs. Commodity supplemental food program. Special milk program for children. Rollover pensions.
Untaxed Income and Benefits
In-kind income that should not be reported on the FAFSA nor verified: Daycare provided by the Social Services
Block-Grant programs. WIA (formerly JTPA) benefits. Payments and services received from states
for foster care or adoption assistance. Women, Infants and Children (WIC)
Program.
Untaxed Income and Benefits
Social Security benefits. Aid administrator not required to verify
unless he/she believes benefits were received and not reported or reported incorrectly. Documentation from the Social Security
Administration. Signed statement from the student (spouse,
parent if applicable).
Untaxed Income and Benefits
Child support received. Does not have to be verified if equals
verified amount from previous year. School can accept:
Verification worksheet. Signed statement confirming amount received
for all children. If paid through a government agency, a
statement from that agency.
Untaxed Income
and Benefits Child support
received. If school doubts
information/ documentation provided.
Options listed.
Untaxed Income and Benefits
Foreign income excluded from US taxation: Can deduct excessive living expenses or
exclude income received from abroad. Deducted for tax purposes but considered
untaxed income for student aid purposes. Verified using IRS Forms 2555 (line 43) or
2555EZ (line 18).
Untaxed Income and Benefits
Finalizing the Verification Process
May award and disburse aid if verification documentation matches all information reported on the FAFSA.
If verification reveals errors or inconsistencies, corrections usually have to be made, unless “tolerance” is allowed.
Verification Tolerance Allows for minor application dollar
amount errors that do not significantly affect the student’s aid eligibility.
Not allowed for errors in non-dollar items, such as household size.
Verification Tolerance Limit of $400. Examples.
Verification Tolerance
Verification Tolerance
Verification Blunders Failing to resolve conflicting
information. Incomplete or undocumented
verification procedures in the FAO’s policy and procedure manual.
Verification not documented or incomplete.
Collecting tax returns up-front and not completing verification.
Verification Blunders Failing to obtain tax returns from both
parents of a dependent student when the parents are married, report dual income information on the application, but file separate tax returns.
Accepting income documentation from the non-custodial parent and spouse to verify the student’s application.
Verification Blunders
Failing to obtain the tax return of an independent student’s spouse.
Accepting a tax return with the preparer’s name and address typed without obtaining a valid signature or stamp.
Verification Case Studies
Four “Not So Easy” Cases
1: The Case of the Mysterious HH Size. 2: Diane’s Dilemma --Taxes ‘R Us. 3: The Case of the Wedding Bell Blues. 4: Bill and His “Separated” Mom.
Verification