GPL Tax Update

Are you under the impression you cannot file for student aid without completing a tax return? Or, maybe you rush to get your individual tax return completed just to file for student aid, without having all of the necessary information. Maybe you contact your accountant for an estimated tax return. Well, good news…that may be a thing of the past, starting in 2017.

Free Application for Federal Student Aid (FAFSA)

The FASFA is the application college and career school students complete for federal student aid. This aid includes Pell Grants, federal student loans, and work-study opportunities. In addition, the information on this application is used by many states, universities, career schools, and private organizations to determine eligibility for nonfederal student aid, to include scholarships. According to the U.S. Department of Education, the FASFA is responsible for funding approximately 20 million students each year.

As it stands now, the FASFA is available for applicants to complete on January 1 for the upcoming application cycle. Unfortunately, many deadlines for state aid are as early as March. For many students, the current application cycle is not in line with college admission application deadlines (typically occurring during fall months). Also, many students and their parents, where applicable, may not have all they need to file the tax return to substantiate income for FASFA. This can lead to them not file the FASFA or to under/overstate estimated income.

On September 14, 2015, President Obama announced significant changes to the FASFA process. The following changes are permanent:

  • Submit a FASFA earlier: The FASFA application for the school year 2017-2018 will now be available on October 1, 2016.
  • Use earlier income information: Beginning with the 2017-2018 FASFA, students and their parents, when applicable, will report their 2015 income information, rather than their 2016 income information.
    • Alignment: This will align student aid application processes with admission processes and state deadlines
    • Certainty: Students will not have to estimate income or taxes paid
    • Less Pressure: Allows for more time to research and seek understanding of their financial aid options

Here at GPL, we use our knowledge to examine

every tax reduction strategy afforded you.