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05.21.08 | The #1 Thing FAFSA Filers Get WRONG
I had the opportunity over the past three days to attend the EASFAA conference, and one of the best sessions I sat in on was on Demystifying Federal Methodology. The presenter explained this vital fact:
The income tax paid line on the FAFSA is the one most often done wrong, and when done wrong, it costs students and families money.
Most people put down their withholding amounts on the FAFSA, not the actual income tax paid.
Depending on how you have federal tax withholding set up, this could cost you financial aid!
So we’re going to change our advice here - instead of recommending that you do your taxes before filing your FAFSA, we’re now going to suggest that you MUST file your taxes first, to ensure as correct a FAFSA (and subsequent EFC) as possible.
Consult a qualified tax professional or a financial planner/CPA to have your taxes done (or redone) - and if you have already filed your FAFSA, do the EFC formula by hand or use the FAFSA Forecaster to see if filing a correction makes sense.
While it is important to try to list accurate tax information on your FAFSA, it is MORE important to make sure that you file your FAFSA prior to the priority deadlines that schools post. If you don’t file your FAFSA until you have filed your taxes and you didn’t file your taxes till say April 1st, you could be missing out on ALOT of potential aid. That is because many grants are given out on a first come, first serve basis. Schools are delegated a certain amount of aid by the federal government. To help them decide who gets the money and who does, they set a deadline that students must meet to potentially qualify for these grants. If you miss the deadline and file your FAFSA later…sorry, you miss out.
My recommendation as a Financial Aid Counselor is that you should file your FAFSA using estimated info (maybe use the prio years taxes to estimate amounts) so that you can file early, say by January 15th. Then later you can log back into your FAFSA and UPDATE your tax information after you file your taxes so that the schools will recieve an update regarding your application. Filing your FAFSA with estimated information will not hurt your eligibility as much as filing LATE will. Do yourself a favor and set a reminder on your email calendar on January 1st to file your FAFSA that weekend.
June 25th, 2008 | #
That’s a great tip, Sharon - thanks so much for contributing!
June 26th, 2008 | #