Financial Aid

How to Complete the FAFSA when a Parent Didn't File her Federal Income Tax Return

Explore the options for students whose parents can't file the FAFSA for financial reasons.

By The Fastweb Team

October 17, 2019

How to Complete the FAFSA when a Parent Didn't File her Federal Income Tax Return
I have a problem with my FAFSA. My mom didn't file her federal income tax returns the prior prior year. What do I use when I fill out my FAFSA application? — Erica H. Federal income tax returns are a requirement when filing the FAFSA. The federal government uses tax return information to look into a family’s financial circumstances and determine how much they can pay towards a college education. These days, the FAFSA makes it easy to input prior prior tax return information with the IRS Data Retrieval Tool. This tool not only makes it quicker to complete the FAFSA but it also prevents errors given that the information is taken directly from previous tax returns. However, there are times when a student or parent did not file a federal income tax return, making this part of the form difficult to complete.

Reasons Not to Complete a Federal Income Tax Return

1. Not required to file. Sometimes, a person does not have to file a federal income tax return because a taxpayer’s gross income is less than the filing thresholds.
2. Filing extension. Some taxpayers file an extension for their income tax returns, granting them six months to complete the records.
3. Authorized suspension of filing requirements. This is for individuals who can’t meet the tax deadlines for official reasons, like being active duty members of the Armed Forces and serving in a combat zone.
4. Unauthorized failure to file. There are a variety of reasons an individual would fall into this category. Sometimes, this happens because a taxpayer is unorganized and simply fails to meet the deadline. Other times, it occurs because the individual owes a big tax bill or is a tax protestor or evader. Finally, it may happen because someone is hospitalized, incarcerated or institutionalized. None of these reasons are adequate for not filing taxes with the IRS.

How to File the FAFSA Without a Tax Return

If no tax return was filed, the taxpayer’s W-2 and 1099 statements and/or the last pay stub can be used to complete the FASFA. In the event that the taxpayer is self-employed, a signed statement confirming the amount of adjusted gross income may be used. Additionally, if the taxpayer requested an extension or suspension of the filing requirement, the individual will have to update the FAFSA when the extension ends. This could change the applicant’s ability for need-based federal financial aid. Finally, an individual that had an unauthorized failure to file will not be able to receive student aid until the applicant files a non-frivolous federal income tax return. Without that information, the federal government regards any financial information from a student or their parents as “conflicting information.” It is against federal regulations for financial aid administrators to disburse student aid or make professional judgments until all information is received and resolved. There are exceptions to these policies, though. Families that have been affected by a federally-declared disaster can work with the IRS, U.S. Department of Education and financial aid administrators to reconstruct records, extend deadlines for filing and tax law changes for disaster victims. If an individual never filed a tax return, it is not the end of the world. College dreams do not need to be dashed. Student aid is not out of reach. It will, however, take a lot of work. A student and their parents should seek the help of a qualified tax preparer or accountant. They will know how to address the problems with the taxpayer’s income tax situation.

What to Do If There is No Help From Parents

There are undoubtedly students who will find no help from parents – whether that’s paying for college or even providing financial information for the FAFSA. Unfortunately, parents’ financial aid information is required on the FAFSA if the student is considered a dependent. Students can petition to be considered an independent student and will qualify if they meet any of the following requirements: • Be 24 years of age or older by December 31 of the award year
• Be an orphan (both parents deceased), ward of the court, in foster care or was a ward of the court when 13 years or older
• Be a veteran of the Armed Forces of the United States or serving on active duty for other than training purposes
• Be a graduate or professional student
• Be a married individual
• Have legal dependents other than a spouse
• Be an emancipated minor or in legal guardianship
• Be a homeless youth
• Be a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances If the student does not qualify for independent status, he or she can talk to a financial aid administrator. They may be able to talk parents into filing the FAFSA or working with an accountant to file federal income tax returns. When they hear from a professional that providing their financial information in no way obligates them to pay for college, they may be a little easier to persuade. Additionally, if a student has a history of abuse or a hostile home environment, they can petition their college for a dependency override. This means that a financial aid administrator has the ability to change the student’s status from dependent to independent, and the FAFSA can be completed without the parents’ information. Finally, if parents still refuse to fill out the FAFSA or submit federal income tax returns, a financial aid administrator can make a student eligible for unsubsidized Stafford loans. Essentially, there are options for students who have parents that won’t contribute financially or provide financial information, like federal income tax returns. It will require a lot of work and many, many phone calls; however, the prospect of having student aid to help pay for school should be more than enough to motivate students to pursue that path. The bottom line is…students should ask for help instead of losing out on a college education because of their parents. Exceptions can be made, and a financial aid administrator’s main mission is to help students pay for school. So students should let them.

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