Pop Quiz – Do We Have to Verify Income Earned From Work During the 2018-19 Award Year?
Question:
A school is aware the IRS Data Retrieval Tool (DRT) is coming back online during the 2018-19 award year, but the school is confused regarding the information provided in the Aug. 7, 2017 Electronic Announcement, regarding income earned from work and what it will mean for its students. Are schools now required to verify income earned from work?
Answer:
No. Just to clarify, for those eligible to use the IRS DRT, the following items transfer from the IRS:
- Type of tax return filed
- Filing status
- Adjusted gross income
- Taxes paid
- Income earned from work
- Exemptions
For those who filed a 1040 or 1040A, the following is also imported:
- Education credits
- IRA deductions
- Tax-exempt interest income
- Untaxed IRA distributions
- Untaxed pensions
First, income earned from work does not need to be verified for tax filers in any tracking group. Second, schools are only required to document income earned from work when there is a tax filer who has transferred in a zero adjusted gross income (AGI), but entered a positive value for income earned from work, which produced a comment code 400 or 401, or the applicant is a non-filer. For applicants and/or parents who file a joint tax return, the total amount is populated via the DRT, and the applicant will be required to split joint incomes. The difference for 2018-19 is that the applicant will no longer be able to see the total income due to data masking, but still must perform the allocation to complete the FAFSA application. This will not affect whether a code of 02 is received. Income earned from work often does not match AGI, so a difference does not necessarily constitute a conflict.
Publication Date: 8/25/2017
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