Verification is the process of confirming responses in the FAFSA® with documentation from the U.S. Internal Revenue Service (IRS), or other tax agency if the student or family worked/filed a tax return outside the U.S, along with additional information as necessary from the student/family. The ISIRs for selected students will have a verification flag set to “Y” and indicate the group to which they have been assigned — V1, V4 or V5. Here are definitions of each:
V1 or the Standard Verification Group: You must verify the following ISIR data: adjusted gross income (AGI), U.S. income tax paid, untaxed portions of IRA distributions, untaxed portions of pensions, IRA deductions and payments, tax exempt interest Income, education tax credits, foreign income exempt from federal taxation (1040 filers), income earned from work, and family size (both filers and non-filers).
V4 or the Custom Verification Group: You must collect documentation of the student’s identity and a Statement of Educational Purpose signed by the student.
V5 or the Aggregate Verification Group: you must complete all the steps in V1 and V4.
You may elect to verify applications that do not have an ISIR flag, but you must verify all that have been flagged except in the following situations:
- You’ve made an interim disbursement and the student died prior to completing verification (note: you cannot make any additional disbursements).
- The student was deemed ineligible for Title IV aid for reasons other than failure to complete verification.
- Students eligible for unsubsidized financial assistance only and selected to group V1 do not need to be verified. However, those same students who are selected to groups V4 and V5 need to complete the identify verification and sign the statement of educational purpose.
- The applicant was verified by another school, and you have written confirmation from that school which contains the transaction number of the verified ISIR so that you award based only on the verified ISIR.
- The student is selected after ceasing to be enrolled at your institution.
- Both parents, the custodial parent (dependent students), or the student’s spouse (independent students) are mentally incapacitated.
- Both parents, the custodial parent, or the student’s spouse have/has died.
- Both parents, the custodial parent, or the student’s spouse are/is residing outside the U.S. and cannot be contacted.
- The location of both parents, the custodial parent, or the student’s spouse is unknown and cannot be found.
When ISIRs contain data provided by the IRS directly, it is considered verified. However, there are many situations when getting the data directly is not possible or what is provided needs to be changed. So here are some situations where additional documentation is needed and what kind of documentation fits the bill…
- Information from the tax return was filled in manually. Each person completing the FAFSA must submit a tax transcript from the IRS or appropriate tax agency if something other than an IRS 1040 was filed. In the event a tax transcript cannot be obtained, a signed copy of the tax return filed along with all schedules can be accepted.
- When the untaxed disbursements from IRAs or pensions reported in the FAFSA are funds that were rolled into a new retirement account. The filer should submit a signed statement confirming how much of the amount reported as untaxed disbursements was a rollover.
- When the parents of a dependent student, or an independent student filed a joint tax return in the base year but indicated a marital status in the FAFSA of widowed, divorced, or separated or is, at the time of filing, married to a different person. Collect documents as in number 1 above plus W2 forms from the base year for those completing the FAFSA. Use this information to adjust the tax return and earned income information to reflect only those people completing the FAFSA
- The student or parent receives a filing extension from the IRS beyond the automatic six-month period or from another applicable tax agency. Collect a copy of the IRS or other agency’s extension approval; a signed statement from the filer indicating all sources of income in the base year; copies of all W2 or equivalent forms for the base year or if the filer was self-employed, a signed statement indicating the estimated AGI and tax paid for the base year.
- When the parent of a dependent student, or an independent student and/or spouse reports that they did not and will not file a tax return for the base year. Those indicating such should submit a signed statement confirming the individual was not required to file and listing all income with sources of that income; copies of W2 forms for all earned income sources listed in the statement. Note: this documentation can be used to ascertain whether the individual was required to have filed a tax return in the base year.
- When the family size is entered manually or differs from the number of dependents on the applicable tax return, collect a statement signed by the applicant and one parent (dependent students) listing all the family members with their ages and relationship to the applicant. You do not need to collect documentation if:
- The student is dependent, the family size is reported as 2, and the parent marital status is single, divorced, separated, or widowed.
- The student is dependent, the family size is reported as 3, and the parent marital status is married or re-married.
- The student is independent, the family size is reported as 1, and the student’s marital status is single, divorced, separated, or widowed.
- The student is independent, the family size is reported as 2, and the student’s marital status is married or re-married.
- When a student selected in group V4 or V5 cannot appear in person to submit identification and sign the statement of educational purpose, they can bring both to a notary and submit notarized copies.
We know that between the FAFSA delays and staffing shortages, managing ISIR verification will be a challenge for many campuses. Let the Higher Education Assistance Group help you get through it! Visit our website for information about our interim staffing solutions or email info@heag.us.
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