FAFSA filers who use the Internal Revenue Service (IRS) Non-Filer Portal (NFP), then subsequently file a 2020 tax return, then use the IRS Data Retrieval Tool (DRT) to transfer their tax information into the 2022–23 FAFSA form will incorrectly and unknowingly report an Adjusted Gross Income (AGI) of $1, according to a notice posted Friday.
This error could result in a lower Expected Family Contribution (EFC) and a higher Pell Grant award for students who would not otherwise be eligible. The notice recommends aid administrators identify all instances of $1 AGIs for filers in 2022–23 FAFSA cycle, and follow-up with applicants to resolve the issue as needed. The new tool causing these errors was launched after the filing season and has several warnings on the landing page and inside the tool to educate taxpayers prior to using it, the notice added.
In another notice posted last week, the Office of Federal Student Aid (FSA) issued a warning about potential issues for 2022-23 FAFSA filers deriving from unemployment benefits made non-taxable by the American Rescue Plan (ARP). FSA said it expects to see an issue with aid eligibility determination for some 2022–23 filers as well as Income-Driven Repayment (IDR) applicants for those with loan payment amounts based on 2020 tax information, even if the IRS DRT was used in either circumstance.
Those who received unemployment benefits in 2020 and filed taxes prior to March 11, 2021, when the ARP was signed into law, will have a higher AGI on their original tax record compared to those who filed after the ARP was enacted.
The notice encouraged aid administrators to work with impacted applicants who filed their taxes before March 11, 2021, to use professional judgment (PJ) to adjust the applicant’s AGI as appropriate.
Publication Date: 10/4/2021