The Department of Education needs the tax return information of the parent or legal guardian of students to determine the expected family contribution. This is crucial for determining a student’s eligibility for federal student aid as it’s decided based on expected family contribution and the cost of attendance of the school.
The tax return information provided to the Department of Education will help figure out the expected family contribution, but how to submit tax return information and what year’s tax return is needed? In this article, we will explain all of these and provide you with details about both FAFSA and tax return information.
What year tax return for FAFSA 2021-22?
For the 2021-22 academic year, Free Application for Federal Student Aid has been opened on October 1, 2020. From this point onwards, the parents and legal guardians of students can submit their tax return information to the Department of Education for FAFSA purposes. For the 2021-22 academic year, taxpayers need to submit their 2019 tax returns to the Department of Education.
How to submit 1040 information online?
The Internal Revenue Service provides taxpayers with multiple tools to make taxes easier. One of the tools offered is the IRS Data Retrieval Tool which works between the IRS and the Department of Education. When you’re filling out FAFSA online, under the finances section, choose IRS DRT as means to submit your tax return information. You will be taken to the IRS website to verify identity and submit tax return information. It works automatically between the IRS and the Department of Education.
After you’ve successfully transferred tax return information to the IRS, you will see it on your FAFSA. This will enable the Department of Education to process the application a lot faster and the Student Aid Report will be finished faster. Getting Student Aid Report or shortly known as the SAR as early as possible is important because it will detail important things about the student’s financial information which will further decide whether or not the student is eligible for federal student aid.
The expected family contribution of the student will be on the SAR of the student. This amount will be deducted from the cost of attendance of the school which will also figure out the needed federal student aid. If the expected family contribution of the student is more than the cost of attendance, the student won’t be eligible for federal student aid. The lower the expected family contribution, the more the student will qualify to get federal student loans.