Families with college students seeking financial aid know the drill: You complete the Free Application for Federal Student Aid (FAFSA) for the next school year as soon as possible after January 1, using information from your prior year’s federal tax return.
Haven’t completed your tax return yet?
You wait until it is complete (which may result in you missing some aid deadlines), or you take your best guess about your prior year’s income, file the application, and then correct it after your tax return is complete.
The Obama Administration recognized that the process could be easier for families and recently announced changes that will allow students to:
- Complete the FAFSA using family income information from two years ago rather than the immediate prior year.
- Submit FAFSA as early as October 1.
The changes go into effect for the 2017-2018 school year. So, the FAFSA for 2017-2018 will use information from your 2015 tax returns (instead of your 2016 tax returns) and can be filed as early as October 1, 2016 (instead of January 1, 2017).
One advantage of using information from two years prior is that your tax return is usually already on file with the IRS. So, instead of manually entering your tax return data into the FAFSA form, it can generally be transferred directly from the IRS into the form.
Plus, submitting the FAFSA earlier may give you an earlier idea of the financial aid and college costs you might expect so that your family has more time to make an informed decision about which college the student will attend.
The changes will not affect the FAFSA for 2016-2017. The earliest you can file the FAFSA for that school year remains January 1, 2016, and you will use the information from your 2015 tax returns to complete the application.
Davis & Hodgdon Associates CPAs is a full-service public accounting firm with locations in Williston and Rutland Vermont. The firm is a member of the Vermont Businesses for Social Responsibility (VBSR), Vermont Business Environmental Partnership (VBEP), Lake Champlain Regional Chamber of Commerce (LCRCC), and Women Business Owners Network (WBON). The firm serves its clients from their locations in Williston, VT and Rutland, VT by providing progressive, proactive services through expert staff, high-end technology, and unparalleled efficiency. For more information call 802-878-1963 (Williston) or 802-775-7132 (Rutland).