Did you know you are not required to complete your IRS federal tax return before filing your FAFSA? It is a common misnomer that it is required when it is simply encouraged. However, there will be a question on the FAFSA about which IRS Tax Form you will fill out in the future, if you haven’t already, and that is where the 1040 Form comes up.
Why you should fill out the 1040 while preparing your FAFSA form:
Having your federal tax return complete will save you a lot of time when filling out your FAFSA. However, some of you will want to file your FAFSA form earlier than you are able to complete your IRS federal tax return. In some cases, federal aid, grants and scholarships are awarded on a first-come, first-served basis and you’ll want to get the ball rolling early in January before you receive your income reports from the previous year.
So what are your options? You can fill out a 1040 form using estimated income amounts, either using your previous year’s tax return or your current pay stubs. You are allowed to report estimated tax data on your FAFSA, as long as you correct the estimates once you finish your taxes.
What is the 1040? Well, it is actually your Federal Income Tax Return form. There are a few different versions of this form and it is important to determine which you will be filing. The FAFSA-on-the-web application will populate other parts of the form for you based on qualifications you would have in order to file the specific types of federal return. This should help guide you:
To qualify for the 1040EZ:
* Your total income is under $100,000
* Your interest income is under $1,500
* You have income only from wages, interest, unemployment compensation, and Alaska Permanent Fund dividends
* You and your spouse are under 65 years old
* Your filing status is single or married filing jointly.
* You do not have any adjustments to income
* You are claiming only the standard deduction
* You may claim the Earned Income Credit
*You are not claiming any other tax credits
If you meet all of these conditions, you are eligible to file the 1040EZ, and you will note this on your FAFSA. Most students are eligible to file the 1040EZ.
To qualify for the 1040A:
* Your total income is under $100,000
* Any age, any filing status
* You have income from wages, interest, dividends, capital gain distributions, IRA or pension distributions, unemployment compensation, or Social Security benefits
* You can claim the following adjustments to income: penalty for early withdrawal of savings, IRA contributions, student loan interest, and jury duty pay given to your employer
* You can claim the following tax credits: Child and dependent care credit, Credit for the elderly and disabled, Education credits, Retirement savings contributions credit, Child tax credit, and Earned income credit.
Completing one of the 1040 tax forms will give you a better idea of what adjustments can be made to your income, such as tuition and fees deductions and student loan interest. And you’ll be a step ahead on filing your federal taxes when you are able to.
Filing your taxes online? Most tax software will determine for you which form you are to file, and then you may note that on your FAFSA. In addition, part of preparing for the FAFSA is gathering your tax and financial information – so you’ll need to complete that anyway!
