College Aid wants tax return

[taxea]

How do you handle the issue of the college's requiring a filed tax return by a certain date and the client hasn't gotten all of their tax documents yet. Usually I have been told the application date was around the middle of March. I just had a client call and say her child's college is requiring it by 2/17!!!
I hate to see my client lose the aid because the aid office is being so unreasonable but I can't with due diligence do the return without all the docs or without charging my client for an amended return when the rest of the docs arrive. I am truly not in the habit of completing a return when I know there are outstanding items.
In the past I have told the client to have the college aid office call me. Anyone have another sugggestion?

[erchess]

Financial Aid

Is it possible that the client has misunderstood and it is the 2008 return that will satisfy the college? If he has any doubt at all I doubt that your fee for calling the college with him would be a whole lot. You obviously need him on the line or his signed permission before you talk to anyone about him. With that said, I like the idea of having someone in the college financial aid department call you. It saves you time. If you can't conveniently take the call they will leave a message with their availability and you can call back.

Assuming that they are indeed asking for his 09 return I still have a couple ideas. Perhaps they would settle for a letter from you stating his income and sources. Failing that, I would not mind filing an initial return as long as I was certain that it if anything overstated his income and if anything understated his deductions and credits. I would recommend preparing a special engagement letter detailing his responsibility to get to you the info for the amended returns and I would want payment for everything at the time he gets the initial return. That way if he decides to make the amended returns low priority you have your wallet paid and your backside covered which are obviously the two most important of your concerns.

[David1980]

I know a lot of people say they need a tax return to complete the fafsa. If you read the instructions, the fafsa doesn't force you to file such a return and says you can estimate income and tax information, so long as the difference is later corrected.

This could easily be misunderstood to assumed by some that a final tax return must be completed and filed and the copy of filed return provided. I find it more likely someone misunderstood this than there's actually a requirement to have a completed final tax return in Feb.

[Snaggletooth]

Yes, but

It may say that you may use estimates without actually filing the tax return, BUT...

When each line item is defined, it is cross referenced to a specific line item on the tax return.

That brings the fafsa application back to needing the tax return...

[newbie]

You can file using the estimated amounts and that will start the financial aid process and when you actually file your return you must go back and correct the information. It is not actually cross referenced until you go back to the application and mark the application that the return has been filed.

If estimated numbers are totally different than actual they will adjust the aid and nothing is released until the final return is filed.

[BOB W]

I have been told by clients who know more than me, that the first to get their application in has a better chance of getting financial aide. Makes sense> first in first out. So early filers, even with estimates, is a better way to go. ?????

[Jesse]

I had to file for the first time in 2008 and that is exactly what the Financial Aid Counselor had suggested. The counselor also said it is more important for students attending private schools because they offer private aid in addition to the federal aid.

[Dusty2004]

Get close then update later

Do the tax return with as much information as you have and supply that to your client (marked as estimated only) and allow them to apply for financial aid (fill out the FAFSA).

When you receive all the final documents then do the final tax return and have them update the FAFSA. I do several of these each year.

Dusty

[Lion]

Fafsa

If your client needs to use estimates on the FAFSA, you/he can also start with his 2008 return and account for any items that changed dramatically, or prepare his 2009 return with the information he has and his estimates for the info he does not have yet. Obviously, you would NOT file this return yet; it will be a draft in your program. I would suggest NOT even printing it for him, but giving him the line numbers and amounts needed for the FAFSA only at this time. Much of the FAFSA is asset information and not just tax return information. If you have a history of preparing his returns and can see a trend or see that everything has remained pretty stable except for his W-2 increasing or..., it will be fast to do an estimate of the lines he needs.

If he really needs a tax return, (and DO confirm this with the financial aid department by having your client tell them to call you) then make sure it says "DRAFT" all over it and you add a cover letter stating brokerage statements are not expected until the second half of February or K-1s until...or you get the idea.

[taxea]

As far as speaking with the college...I talk in general terms related to their "totally unacceptable demand for the current tax return", not as a specific issue with a particular client. Nor do I discuss figures from current documents with the college.

Until the new 7216 law I took it that by the client asking the college to call me the client was approving my speaking with them. Still would only address the time factor issue and not items specific to the client's return.

Answers to other posts: they want the current year, will not accept a draft because it is not a "copy of the filed return".

[taxea]

this is from an email response to a college aid office:

the current year IRS tax document must be filed and sent in to the institution at the same time as the application.

[BOB W]

this is from an email response to a college aid office:

the current year IRS tax document must be filed and sent in to the institution at the same time as the application.

I don't think this person knows what he/she is talking about. The form allow ESTIMATES, so where is he/she coming from.

[newbie]

Its's not the FASFA official Free Application for Federal Student Aid then cause this does allow you to file with estimates.

[David1980]

Problem is you get some college administrator who doesn't understand the rules in charge of it.

If you ask me, they'll never know whether that estimated 1040 is an estimate or the filed copy. You can stamp "CLIENT COPY" on it and not be lying, it's a client copy of an estimate, and it would prevent them from filing that estimate.

[FEDUKE404]

You have to be a bit realistic

I've dealt with several frustrated parents/students enduring this ordeal. Many parents have not-so-complicated tax returns that it still takes a while for all of the relevant information to arrive, certainly post mid-February!

Regardless of what "some" college advisors are saying, you certainly can make your "best guess" and update the FAFSA at a later date. Using the prior year tax return numbers for the first run will not cause the earth to stop revolving either.

What I have tried, with some degree of luck, is working with the parents to have THEM make a few telephone calls to obtain the necessary information, and then I help them with an expedited return. Of course, you still do not have to FILE that return until later, which leaves everyone an out.

FE