<p>Our income dropped this year - lucky us! Anyway, in filling out the FAFSA for expected income for 2012, a warning box came up on the FAFSA indicating that our income was a lot lower than what we documented the previous year. </p>
<p>Even though this will be verified eventually by our tax returns, will this mean that somehow we will be flagged and our aid will not be approved (i.e., they won’t believe that our income would drop so much)?</p>
<p>Thanks.</p>
<p>The flag means that you are almost certainly going to be selected for verification which means the school financial aid office will ask for additonal information. You can be randomly so selected too, but when your are flagged it’s pretty much a certainty.</p>
<p>We got the warning box for paying more taxes in 2011 than in 2010. Seemed logical to me as when the kids get older, you lose that $1000/child tax credit. However, the warnng box popped up, and we were chosen for verification. </p>
<p>Seems like we’ll be selecting “will file” on the FAFSA, whether or not our taxes are done because it takes so long before we can verify income and taxes from the IRS site that the school’s priority deadlines have already passed. Still, once info was available, we just used the retrieval tool, and that was the end of it. </p>
<p>I’m expecting a warning this year (interim position paid a lot more in 2012) and again next (returned to old position at lower salary). And, of course, I expect to be selected for verification.</p>
<p>Heck, we were chosen for verification just for parent loans which don’t depend at all on income. All OOSers are automatically flagged at DS’s school. So anything and even sheer randomness can get you flagged for verification. That you got the warning box makes it about 100%.</p>
<p>If your priority date is in January or early February, then you will definitely have to wait for verification. The IRS won’t start processing any returns until January 22nd, and then you have to allow for processing time. Incidentally, for those expecting a refund, they are now saying refunds will typically take up to 21 days (not the 15 days they have stated in past years). There will be further delays because certain forms won’t be available right away either (and if you complete your taxes online, the software has to be updated, and the IRS has to approve those forms as well - it’s going to be a long wait).</p>
<p>We never got a flag but one of our kids was verified for four years. Ridiculous since he didn’t qualify for a penny of federally funded need based aid. The school chose us randomly, I guess. The colleges DO tell you exactly what to send to them. My only free advice…send the required submissions ASAP as your aid will not be finalized or disbursed until you verification is complete.</p>
<p>Our income dropped last year because I retired and my son’s fafsa was flagged for verification. The school(s) will let you know what they need in the way of additional documentation. Keep an eye on your student’s online portal at the schools. The notification of what doc you need may show up there before or in lieu of getting email or snail mail notification. After you file your taxes, use the IRS Data Retrieval Tool when completing your fafsa. Doing so should satisfy the income verification in most cases. If you are going to owe additional tax this year, make your payment right away as the data retrieval tool and tax transcripts won’t be available until the IRS receives your payment.</p>
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<p>FWIW, consensus in the professional preparer community is that the switchover to MeF will result in faster refunds, not slower ones. Under the legacy system, e-filed returns filed by the drain time on Thursday morning had refunds directly deposited the following Friday (8 days out). Modernized e-file (MeF) has no weekly refund drain; returns are processed and refunds queued continuously.</p>
<p>The 21-day turnaround estimate also covers paper returns (which used to have a 4-6 week estimated processing time) and returns with processing delays.</p>
<p>Official IRS statement says, “Following technology improvements, the IRS will issue refunds to more taxpayers in as few as 10 days this year. But taxpayers should keep in mind that many variables can affect the speed of a tax refund. The IRS issues more than 90 percent of refunds within 21 days.” [2012</a> Tax Season Refund Frequently Asked Questions](<a href=“http://www.irs.gov/uac/2012-Tax-Season-Refund-Frequently-Asked-Questions]2012”>http://www.irs.gov/uac/2012-Tax-Season-Refund-Frequently-Asked-Questions)</p>
<p>Thanks so much for your help with this.</p>
<p>I thought that, with the advent of the IRS Data Retrieval Tool and being able to directly link your tax return to your FAFSA, that virtually everyone gets verified now.</p>
<p>I always figured those warning boxes were an attempt to reduce mistakes in filling out the forms.</p>