Attached to this Electronic Announcement is the 2022-2023 FAFSA Verification-IRS Tax Return Transcript Matrix that institutions can use for 2022-2023 verification of IRS tax return information included on the Free Application for Federal Student Aid (FAFSA) application.
Since the IRS Tax Return Transcript does not have line or item numbers and uses wording that may be different from what is used on the FAFSA, this matrix may help financial aid administrators map 2020 IRS Tax Return Transcript information to FAFSA/ISIR data. The first column of the matrix lists the six 2021-2022 FAFSA information items that, consistent with the September 1, 2021 Federal Register notice, may need to be verified for a student or parent who indicated that they did or will file a 2020 IRS tax return.
The second column displays the student and parent FAFSA question number for each item. The third column displays the student and parent ISIR item number. ISIR Field numbers are from the 2022-2023 Electronic Data Exchange (EDE) Technical Reference under the ISIR Record Description/Data Dictionary. The fourth column of the matrix is the item name as displayed on the IRS Tax Return Transcript. Note that for some items the transcript may display two or three values for an item. If only one value is displayed on the transcript, that value must be used for verification. If more than one value is displayed on the transcript, the value associated with the item name that includes the words “Per Computer” must be used for verification. The “Per Computer” line should be used for verification even if it is different than what was reported by the tax filer. The last column shows the corresponding line item numbers from the 2020 IRS 1040 tax return.
Also of significance to the 2022-2023 award year are two important considerations:
Erroneous $1 AGIs—FAFSA filers who use the IRS Non-Filer Portal to claim credits associated with COVID reliefs, prior to filing a 2020 tax return, and then use the IRS DRT to transfer their tax information into the 2022–2023 FAFSA will have an incorrect AGI of $1. This may result in a lower EFC and a higher Pell Grant award for students who would not otherwise be eligible. As a result of this issue, Financial Aid Administrators are encouraged to identify all instances of $1 AGIs, for the 2022–2023 FAFSA cycle, and follow-up with applicants to resolve as appropriate. We have been informed by our partners at the IRS that in situations where the applicant does not have a copy of their tax return as filed with the IRS, the taxpayer may contact an IRS customer service representative following established procedures, to request a 1722 letter or an IRS account print out, as their tax return transcript. (See Electronic Announcement posted September 30, 2021) and
Post Unemployment Compensation Exclusion Adjustment—The American Rescue Plan (ARP) Act made the first $10,200 of unemployment benefits non-taxable for each taxpayer with incomes less than $150,000. The untaxed portion of unemployment benefits increases to $20,400 for applicants who have a tax filing status of married-filing-jointly (if both tax filers received benefits). If aware that an applicant's AGI includes the amount of unemployment that should be untaxed, schools should remove the untaxable unemployment benefits from the applicant’s (or the parents’ or spouse’s) AGI or untaxed income on the FAFSA. (See Electronic Announcement posted September 30, 2021)
Under provisions of the Higher Education Act (HEA), taxes and credits related to the Affordable Care Act (ACA) are not to be included in the amount of U.S. Taxes Paid that are used in the calculation of a student's expected family contribution (EFC).