Reporting of Untaxed Social Security Benefits on the FAFSA and the Impact of IRS Filing Extensions on FAFSA Verification

Reporting of Untaxed Social Security Benefits on the FAFSA and the Impact of IRS Filing Extensions on FAFSA Verification

I am a college student with a severe congenital physical

disability. If I apply for and am granted SSI benefits, will receiving

these benefits cause my family’s EFC to increase? I am not employed

and am a full-time student, living in my parents’ home. Would we end

up paying more for my college expenses if I were to receive SSI benefits?

— Sharon K.

The College Cost Reduction and Access Act of 2007 (P.L. 110-84)

amended section 480(b) of the Higher Education Act of 1965 to remove

the Supplemental Security Income Program (SSI) from the definition of

untaxed income and benefits starting with the 2009-10 Free Application

for Federal Student Aid (FAFSA). As such, receipt of SSI benefits will

have no impact on your eligibility for need-based federal student aid.

Besides removing untaxed Social Security benefits such as SSI from the

definition of untaxed income and benefits, the legislation also

removed removed welfare benefits such as TANF, the earned income tax

credit, the credit for federal taxes on special fuels and the foreign

income exclusion.

My FAFSA has been selected for ‘verification’ and I have been asked

to submit my tax return for review. However, we are filing an

extension, and so the tax return is not available. Can I use the

previous year’s income tax return instead?

— Lisa

Taxpayers can get an automatic six-month extension of the time to file

their federal income tax return by filing IRS Form 4868.

Contact the college’s financial aid office for instructions on what to

do if you filed for an extension. Generally, the college will want to

see a copy of the IRS Form 4868 as filed by the family, as well as

copies of W-2 forms and 1099 statements. It may also be helpful to

provide them with copies of the last pay stub of the

year. Occasionally colleges will want to see a copy of the previous

year’s federal income tax returns to determine whether there are any

additional significant sources of income that aren’t included in a W-2

form or 1099 statement.

The college will also require you to send it a copy of the federal

income tax return after you file it later this year.

Some colleges will require you to submit IRS Form 4056-T to the IRS so

that they get confirmation from the IRS that you did indeed file for

an extension.

Source: Fastweb

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