As part of the Trump administration’s efforts to simplify filing taxes, the IRS changed the 1040 tax form that helps students apply for federal financial aid. This year’s Free Application for Federal Student Aid (FAFSA) was released on Tuesday, and with the new changes, US senators are warning students any errors could make them ineligible for aid.
Though the new system was supposed to simplify taxes, it’s done the opposite. Now, students will have to manually enter tax information into the FAFSA, increasing the likelihood for problems.
The 1040 tax form, which is used to report standard federal income taxes, was redesigned to be the size of a postcard. But this new form was “a mess,” tax lobbyist Ryan Ellis told Bloomberg News. Many agree. The instructions for the new tax form are more complicated, and some of the information on the old 1040 was just moved to new tax forms. Yes, that means there are even more forms to fill out now.
How does this impact students? Some of the information that’s no longer on the 1040 form will still have to be manually inputted for FAFSA application. That information includes student loan interest deduction, unemployment pay, educator expenses, capital gains, self-employment tax, and more. All of that used to be automatic with the IRS Data Retrieval Tool, which helps students fill in their family’s tax information so they can receive financial aid.
A group of 10 US senators, including Democratic candidate Bernie Sanders, released a letter in August asking the Department of Education and the IRS to address this problem. “This will not only further complicate the FAFSA completion process for many families,” the letter stated, “but will likely result in the submission of incomplete and inaccurate information regarding some applicants’ financial aid eligibility.”
Charlie Javice, CEO of Frank, a company that helps students file the FAFSA for free, agrees. “We should expect lower FAFSA completion rates across the board,” she told Buzzfeed News. Javice also expects more applicants will have to go through FAFSA verification, which is a type of audit. This may be an even bigger issue, since 60% of students never get through verification.
“This is a big step backward when it comes to college access,” Javice said. She advises students to complete their FAFSAs as early as possible this year, and to be extra careful. With even more room for error, students need to get a head start to qualify for the aid they need.
1040 Form FAFSA Impact — Sources
Buzzfeed News
Bloomberg Tax News