If you have a college student in your household—or will have one in the near future—you’ve probably heard of FAFSA. FAFSA stands for Free Application for Federal Student Aid. This is the form that must be completed in order for your family to receive financial aid.
As you can imagine, financial aid is a part of the college routine for the vast majority of American students. According to the National Center for Education Statistics, 85 percent of first-time, full-time, degree-seeking students received some form of financial aid during the 2013-2014 school year. That means every one of those students had to complete a FAFSA form.
Regardless of whether you want to take out federal student loans, you’ll need to go through this process. The information collected on the FAFSA is used to award grants. It is also used by many institutions to award scholarships. Starting in 2016, the FAFSA deadline has been changed. You can now file your FAFSA beginning on October 1. This change was made to give families more time to make financial decisions. It also helps accommodate the flexible admissions timelines some colleges use.
So what does this have to do with your taxes? Primarily, you’ll need information from your tax returns to complete these forms. In the past, you had to wait until January to access forms for the upcoming school year. You also needed your most recent tax return. This meant you had to file your taxes before you could file your FAFSA. The earlier deadline means you can now use your tax returns from the year before. This is referred to as your “prior-prior-year” tax information.
For some households, you won’t even have to track down the paper copies of your tax returns. The FAFSA is integrated with the IRS Data Retrieval Tool. This means you may be able to automatically pull in information from your tax return.
The Department of Education hopes that all of these initiatives will make filing for financial aid easier than ever before. If you have questions about how your tax information affects your financial aid application, or about education-related tax deductions, ask your tax preparer. Blackwell’s Tax Service offers tax preparation and tax advice in Fort Mill, Rock Hill, and surrounding areas of South Carolina. We’ll help you navigate the tax side of your educational plan. Call us today to discuss your financial plans for college.