For financial aid administrators, verifying tax data can be a tedious process. Modifications to the 2018-2019 FAFSA should be a welcome change.
IRS Data Retrieval Tool (DRT)
First and probably the most important, is the return of the IRS Data Retrieval Tool (DRT) for families to potentially download their income information directly into the FAFSA. The DRT functionality had suffered a seven-month hiatus. A big change as opposed to years past with the DRT, is the tax data will no longer be visible to the person completing the FAFSA. The figures will be encrypted which is one more crucial step to helping prevent identity theft. Potential hackers can no longer simply create an account with known personal identifiers of an unsuspecting user and grab the income data displayed on the screen.
Another new feature, after logging in for the first time, the user will be presented a screen in which they must accept terms of agreement with the legal ramifications explained for those attempting to access a file that does not belong to them. “Any access in furtherance of any criminal or tortious act in violation of the Constitution or laws of the United States or any State. If system monitoring reveals information indicating possible criminal activity, such evidence may be provided to law enforcement personnel.”
Keep 2016 W-2s and 1099s Handy
A good tip for those families completing this year’s FAFSA is to have their W-2s and 1099s handy from 2016 because while a large majority of the data is going to transfer in from the federal tax return, the family is still required to answer questions about wages and retirement account contributions. Also, if there was a roll-over transaction in the tax year, the family will be required to answer questions regarding whether the full amount was rolled over or not.
Request Tax Transcripts Via Phone, Fax or Mail
For those that have issues or flat out refuse to use the IRS data retrieval tool, they may have difficulty requesting the 2016 tax transcript online if the school asks for it. Because the IRS has had issues with identity theft in the past, the IRS has been hesitant to offer up the online service once again to new users. Families will need to request tax transcripts via the 4506-T form which can be faxed/mailed or by calling the IRS directly, until this service is offered again.
Added Level of Security
Finally, another level of security added this year is that the FAFSA user will get a letter mailed to them, letting them know that their tax data was utilized to complete the form, in case there may be identify theft involved. The FAFSA process continues to improve each year and the federal government has taken some key steps to ensure personal data is kept more secure.
For verification purposes, financial aid administrators will be happiest to see the DRT service is available once again, leading to less required collection of tax documents at the school level. And if you find your school needs help with verification, contact us to see how HEAG’s premier remote verification service, VERIFY, and our financial aid consultants can help.