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Reporting of Untaxed Social Security Benefits on the FAFSA and the Impact of IRS Filing Extensions on FAFSA Verification

Mark Kantrowitz

May 31, 2010

I am a college student with a severe congenital physical disability. If I apply for and am granted SSI benefits, will receiving these benefits cause my family’s EFC to increase? I am not employed and am a full-time student, living in my parents’ home. Would we end up paying more for my college expenses if I were to receive SSI benefits? — Sharon K.

The College Cost Reduction and Access Act of 2007 (P.L. 110-84) amended section 480(b) of the Higher Education Act of 1965 to remove the Supplemental Security Income Program (SSI) from the definition of untaxed income and benefits starting with the 2009-10 Free Application for Federal Student Aid (FAFSA). As such, receipt of SSI benefits will have no impact on your eligibility for need-based federal student aid.

Besides removing untaxed Social Security benefits such as SSI from the definition of untaxed income and benefits, the legislation also removed removed welfare benefits such as TANF, the earned income tax credit, the credit for federal taxes on special fuels and the foreign income exclusion.

My FAFSA has been selected for ‘verification’ and I have been asked to submit my tax return for review. However, we are filing an extension, and so the tax return is not available. Can I use the previous year’s income tax return instead? — Lisa

Taxpayers can get an automatic six-month extension of the time to file their federal income tax return by filing IRS Form 4868.

Contact the college’s financial aid office for instructions on what to do if you filed for an extension. Generally, the college will want to see a copy of the IRS Form 4868 as filed by the family, as well as copies of W-2 forms and 1099 statements. It may also be helpful to provide them with copies of the last pay stub of the year. Occasionally colleges will want to see a copy of the previous year’s federal income tax returns to determine whether there are any additional significant sources of income that aren’t included in a W-2 form or 1099 statement.

The college will also require you to send it a copy of the federal income tax return after you file it later this year.

Some colleges will require you to submit IRS Form 4056-T to the IRS so that they get confirmation from the IRS that you did indeed file for an extension.


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