Delayed Tax-Filing Season and Your FAFSABondBeebe
Posting by Sean Urbany
With the fiscal-cliff deal being reached on the last day of 2012, the IRS announced that it was going to delay the opening of the 2012 tax-filing season until January 30, 2013. Along with this delayed start, there has also been a delay in the release of several of the forms that are used in the preparation of tax returns. Some of the delayed forms commonly used include: Form 4952 (Deprecation & Amortization), Form 8863 (Education Credits), and Form 8582 (Passive Activity Losses). These delays combined with brokerage firm 1099’s usually being delivered to taxpayers around February 15th, means that many taxpayers could be filing their tax returns later than normal this year.
Many parents with children either in college or heading to college may be wondering how these delays will affect their Free Application for Federal Student Aid (FAFSA). The FAFSA is used to determine eligibility federal student aid and is also used by states and colleges for the same purpose. Due to the circumstances surrounding this year’s tax-filing season, many parents may not have all of their tax information ready to meet some of the early deadlines that states or colleges impose for filing a FAFSA, which may be as early as February 15th. Along with the deadlines, another problem presented by delayed filing of your FAFSA is that, per a recent Wall Street Journalarticle, much of the aid awarded based on your FAFSA is awarded on a first-come, first-served basis, which means your FAFSA should be filed as early as possible.
If you are one of the parents that find themselves without a completed tax return for the filing deadlines due to this year’s delayed season or because your tax return is normally completed post April 15th, you have a couple of options available to you for filing your FAFSA on time. The first option, per FAFSA’s “Completing the FAFSA 2013-2014”, is that if you think that your 2012 income will be similar to your 2011 income, you may use your 2011 tax return information to answer the income related questions on the FAFSA.
The second option available is that if you think your 2011 income will not be a good measurement of your 2012 income, then you may answer the income related questions on the FAFSA using estimated amounts. As you may have already received certain tax documents, i.e. W-2, certain 1099’s, 1098’s, etc, the best way to estimate your income for 2012 may be to prepare a draft Form 1040. The remaining unknown amounts for 2012 in your return should be estimated to the best of your ability.
No matter what option you choose, once your 2012 tax return is complete, the U.S. Department of Education requires you to update any estimates that you provided when your original FAFSA was filed.
The delayed tax-filing season has left some taxpayers in an unfamiliar situation with respect to their FAFSA filing, but with the options presented above, you can complete and file your application sooner rather than later and meet the earliest of deadlines.
If you would like more information about FAFSA or if you are unsure of the deadlines that will affect your FAFSA filing, please visit www.fafsa.ed.gov or contact your college for more information.