1040 Form – How to File your FAFSA before your Federal Tax Return | 12.09.10

Posted in FAFSA, Financial Aid, Stafford Loan By Student Loan Network Staff

Did you know you are not required to complete your IRS federal tax return before filing your FAFSA? It is a common misnomer that it is required when it is simply encouraged. However, there will be a question on the FAFSA about which IRS Tax Form you will fill out in the future, if you haven’t already, and that is where the 1040 Form comes up.

Why you should fill out the 1040 while preparing your FAFSA form:

Having your federal tax return complete will save you a lot of time when filling out your FAFSA. However, some of you will want to file your FAFSA form earlier than you are able to complete your IRS federal tax return. In some cases, federal aid, grants and scholarships are awarded on a first-come, first-served basis and you’ll want to get the ball rolling early in January before you receive your income reports from the previous year.

So what are your options? You can fill out a 1040 form using estimated income amounts, either using your previous year’s tax return or your current pay stubs. You are allowed to report estimated tax data on your FAFSA, as long as you correct the estimates once you finish your taxes.

What is the 1040? Well, it is actually your Federal Income Tax Return form. There are a few different versions of this form and it is important to determine which you will be filing. The FAFSA-on-the-web application will populate other parts of the form for you based on qualifications you would have in order to file the specific types of federal return.  This should help guide you:

To qualify for the 1040EZ:

  • Your total income is under $100,000
  • Your interest income is under $1,500
  • You have income only from wages, interest, unemployment compensation, and Alaska Permanent Fund dividends
  • You and your spouse are under 65 years old
  • Your filing status is single or married filing jointly.
  • You do not have any adjustments to income
  • You are claiming only the standard deduction
  • You may claim the Earned Income Credit
  • You are not claiming any other tax credits

If you meet all of these conditions, you are eligible to file the 1040EZ, and you will note this on your FAFSA. Most students are eligible to file the 1040EZ.

To qualify for the 1040A:

  • Your total income is under $100,000
  • Any age, any filing status
  • You have income from wages, interest, dividends, capital gain distributions, IRA or pension distributions, unemployment compensation, or Social Security benefits
  • You can claim the following adjustments to income: penalty for early withdrawal of savings, IRA contributions, student loan interest, and jury duty pay given to your employer
  • You can claim the following tax credits: Child and dependent care credit, Credit for the elderly and disabled, Education credits, Retirement savings contributions credit, Child tax credit, and Earned income credit.

Completing one of the 1040 tax forms will give you a better idea of what adjustments can be made to your income, such as tuition and fees deductions and student loan interest. And you’ll be a step ahead on filing your federal taxes when you are able to.

Filing your taxes online? Most tax software will determine for you which form you are to file, and then you may note that on your FAFSA. In addition, part of preparing for the FAFSA is gathering your tax and financial information – so you’ll need to complete that anyway!

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99 Responses to “1040 Form – How to File your FAFSA before your Federal Tax Return”

  1. Sarah says on January 13, 2012 at 8:38 pm:

    So when filing the FAFSA for the 2012-13 application, if you’re trying to get it in early because a college has a very early deadline, and you can’t get the ’11 tax return filed yet — is it prudent to estimate 2011 taxes, or simply to use the previously filed 2010 return? Corrections will have to be made to both, but not sure if filing from concrete data of a filed return, is better starting point than estimated data from a not yet filed return.
    How difficult is it to go back in and make corrections?

    Reply To This Comment
    • Student Loan Guru says on January 16, 2012 at 9:43 am:

      If your 2010 return is similar to what you expect this year’s to be, its easier to use this. If there has been a major change (for example, you got a higher paying job) you may want to estimate.

      Making corrections is simple, especially since the US Dept. of Ed. redesigned the corrections process to better match the actual online FAFSA. This will make it easier to file, plus, they will send an email sometime in March, reminding those who estimated to go back and correct the form.

      Reply To This Comment
  2. mike says on January 13, 2012 at 2:26 pm:

    I have a son in college and he gets the fafsa aid. if i claim my boyfriends kids as dependents this yr. because he didnt work much this yr. and i supported most of yr. will it affect his awards or grants in any way?

    Reply To This Comment
    • Student Loan Guru says on January 16, 2012 at 9:40 am:

      It’s possible he will be eligible for more aid since your income is now being split between other dependents as well. You can find out what the difference might be by using the FAFSA4Caster calculator.

      Reply To This Comment
  3. kristen says on January 12, 2012 at 11:19 pm:

    Hi, I have been unemployed the last 3 years and therefore have not filed taxes. I recently went back to school and was hoping to get financial aid to help me but because I haven’t filed taxes for the last three years, I don’t know if I’m eligible. I am an independent student, and when I browsed thru the FAFSA website application they asked that I provide information from last year’s income tax, which I obviously don’t have. Help! Do I skip and ignore it, put in 0, what? So confused. Thanks in advance for your help!

    Reply To This Comment
    • Student Loan Guru says on January 13, 2012 at 1:35 pm:

      If you are not required to file any taxes according to the IRS, then there is an option on the FAFSA that says “Will not file”. You can simply select this option which will let you skip the tax information portion of the application.

      Reply To This Comment
  4. Maribel says on January 10, 2012 at 8:31 am:

    My father has not file tax for the last three yrs will that make me non elegible?

    Reply To This Comment
    • Student Loan Guru says on January 10, 2012 at 9:42 am:

      Nope, students are still eligible if parents don’t have taxes on file. If your father was not required to file taxes this year (per the IRS guidelines), then you can choose the option “Will Not File” on the FAFSA. If he should have filed taxes and did not, this could potentially raise a red flag on your FAFSA.

      Reply To This Comment
  5. juliet says on December 27, 2011 at 11:07 pm:

    HI i have a question about my Fafsa…Actually i’ve been live with my boyfriend over 3 years and we have 2 kids .We didn’t married yet.But we fill out tax together last year (JOINT ) I made only $1300.00 last year because of the kids.My boyfriend more than me and he support all of us….What should i fill for my marital status and tax for FAFSA

    Reply To This Comment
    • Student Loan Guru says on January 6, 2012 at 4:03 pm:

      For the FAFSA, you will need to select your marital status as of today. If, in your state, you have a common law marriage, then you may select married on the FAFSA. If this is not the case, you will need to select single. This may present a problem when it comes time to process your FAFSA since you filed a joint tax return. This indicates to the FAFSA processors that you’re selecting both single and married, so don’t be surprised if you are selected for verification. Ultimately, you may end up needing to correct your tax information if you filed jointly when you were ineligible to do so.

      Reply To This Comment
      • Maria says on January 25, 2012 at 12:07 am:

        My daughter will be a freshman in college this year and we are completing the fafsa for the first time. She worked part time in 2011 and made $3500. If she files taxes but I claim her as a dependent will it decrease the amount of aid she will get? I made $59900 in 20111, am divorced with 6 dependents.

  6. Dawny says on December 16, 2011 at 2:00 am:

    I am a new student & I am about to fill out the FAFSA forms online, I realize now that I can fill this out without waiting to fill out my taxes, but how do I estimate my income if I was on California disability for about 6 mths out of this year? If I use last years tax return my wages will have been much higher. I am currently unemployed & still on disability, but it will end in about 2 months. It is not the end of December, so I’m thinking that I should fill the forms out ASAP.

    Reply To This Comment
    • Student Loan Guru says on January 6, 2012 at 4:06 pm:

      Disability income does not need to be included in your Adjusted Gross Income. Simply enter zero for this field if disability was your only source of income. Another question on your FAFSA will asked if you received benefits such as disability, which is where this will be reported.

      Reply To This Comment
  7. allyssa says on November 14, 2011 at 5:20 pm:

    My husband and I filed our taxes together last year. In order to file for fasfa this year, i had to get a tax return transcript. One question on the fasfa is what is YOUR wages, salaries, tips, etc. The next question is what is your SPOUSES salaries, tips, etc. It only lists a certain amount for the both of us combined. How do I know how much to put for each?

    Reply To This Comment
  8. Lexie says on October 14, 2011 at 1:34 pm:

    parents filled out FAFSA with estimated taxes and checked “will file”. I was awarded financial aid based on the information and was able to get stafford loans. However, I had planned on going to college A. But just a couple days before school started, I dropped and decided to go to College B instead. College B has now received my financial aid but refuses to release it because they need to verify the estimated income my parents put on the FAFSA. Problem…parents still haven’t filed their taxes, they got an extension and it appears that they plan to keep filing extensions. What are my options? My parents are upset with me for changing colleges and refusing to help clear this up.
    I have no income as I am working really hard on my studies. I am attending college and just accepting late fees on the tuition..I don’t know what to do. I don’t want to drop out.

    Reply To This Comment
    • Student Loan Guru says on October 14, 2011 at 2:43 pm:

      @Lexie – This is directly from the Department of Education’s guidelines for tax extensions:

      “At the time of verification, the necessary tax returns should have been filed and must be used for verification. If a return hasn’t been filed by then and a filing extension was granted by the IRS, the school shall accept as alternative documentation copies of the W-2 forms, and, as proof that the IRS has granted a filing extension, either a copy of IRS Form 4868—Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (automatically grants the taxpayer a six-month extension beyond the April 15 deadline) or a copy of the IRS approval of an extension beyond the automatic six-month extension.

      In addition to supplying the above documentation, the student must submit a copy of the tax returns when filed. When you [the financial aid office] receive the completed tax returns, you may use them to re-verify the required data. A student who fails to submit a copy of the filed tax return or alternative documents before the deadline for verification is ineligible for FSA funds and is required to repay any aid disbursed.”

      Reply To This Comment
  9. SHAQUILA says on October 7, 2011 at 6:52 am:

    HI ……I AM A SENIOR THIS YEAR IN HIGH SCHOOL….Im feeling out the fasfa this year for the first time….i filled my fasfa out this september thinking it would not be processed untill january because that is when the system will kick on. so my question is will my fafa information will just sit on the sysytem untill january?….what does processed really mean?……and how often do i apply?…(yearly or every semester)

    Reply To This Comment
    • Student Loan Guru says on October 18, 2011 at 12:13 pm:

      The online application is currently available only for students applying for aid for the 2011-2012 academic year. If you filed this and it was processed, you should be able to simply login and update the information for the 2012-2013 school year starting in January. You must apply every year, however, you can usually submit a FAFSA Renewal form for subsequent years, which is a shorter process.

      Reply To This Comment
  10. Jasmine says on September 28, 2011 at 2:11 pm:

    Am I able to complete the FAFSA for next the 2011-2012 year if I did not file taxes for 2010?

    Reply To This Comment
    • Student Loan Guru says on September 29, 2011 at 7:46 am:

      @Jasmine – Yes, as long as you were not required to file taxes, you can simply select “will not file” on your FAFSA. However, if you were required to file and got an extension, your FAFSA will not be processed until your tax information is received and verified.

      Reply To This Comment
  11. Michele Chisholm says on August 29, 2011 at 5:03 pm:

    Our accountant always applies for our son’s FAFSA and uses estimated income numbers. This year, our son is selected for verification and was told that no FAFSA will be released until the tax return is complete, but that won’t be for another month or so.

    He is a senior this year. Nothing is different. All W2′s, 1099s, INT, etc., were provided. My daughter is a freshman, and her FAFSA was released.

    I am filling out the verification worksheet I found online, but I don’t see how that verifies anything different than the package of information we handed in at the financial aid office.

    Please advise is possible. Thanks.

    Michele Chisholm

    Reply To This Comment
  12. steve says on August 16, 2011 at 12:35 pm:

    is it possible to receive student loans if you are unemployed with no tax return

    Reply To This Comment
    • Student Loan Guru says on August 17, 2011 at 8:58 am:

      @Steve – Yes, but you will need to have been unemployed for the entire previous year. You will still need to provide any relevant financial information, but if you did not need to file a tax return, then you can still file the FAFSA.

      Reply To This Comment
  13. Eileen says on July 24, 2011 at 4:29 pm:

    My daughter is a full time dependent student who generally does not qualify for financial aide but receives Strafford Direct Loans. I submitted FAFSA form late this year and am on extension for our personal taxes, so I checked “Will File”. I am waiting for K-1 information to complete return. Can my daughter still receive her loan based upon the estimated numbers, or will everything be held up until I indicate that the return has been filed? Thanks.

    Reply To This Comment
    • Student Loan Guru says on August 4, 2011 at 7:27 am:

      @Eileen- You will most likely need to update the FAFSA for her to receive aid. However, if your daughter has gotten a Student Aid Report from her school and has signed the Promissory note, then she should be able to receive funds based on the estimates. To make sure, it’s usually best to contact the school’s financial aid office, as they can give you a more case-specific answer.

      Reply To This Comment
  14. Ben says on June 26, 2011 at 12:25 pm:

    I filed my FAFSA as early as possible (late Feb.), using “will file” and then did my taxes shortly thereafter. It went through and said that it had been submitted to the school. I just went online today to update my status to “already filed,” will this affect my loans or totally screw up the process. I’m now totally paranoid.

    Reply To This Comment
    • Student Loan Guru says on June 27, 2011 at 8:06 am:

      @Ben- If you filed using an estimate and were pretty close, then you should be fine. If your estimates were way off, then it could cause some changes to your aid. For now, I wouldn’t worry, and you can always take out private loans at the last minute, should you find yourself short on funds.

      Reply To This Comment
  15. Megan Gordon says on June 18, 2011 at 11:49 am:

    I am seperated and my husband will not give me a copy of our taxes from last year and I need them to enroll for the fall. Please advise

    Reply To This Comment
    • Student Loan Guru says on June 20, 2011 at 9:23 am:

      @Megan- If you filed your taxes jointly, you should be able to request a tax transcript from the IRS. This will provide the basic information from your original return. To order a transcript, visit the IRS website.

      Reply To This Comment
  16. Ian says on June 6, 2011 at 10:53 pm:

    I did my fafsa, but it only had a place to put in my parents income-I am considered a dependent student.. It keeps on saying that it assumes I did not file taxes, but I did. I don’t see anywhere on the fafsa form to correct this. Is there something I am missing?

    Reply To This Comment
    • Student Loan Guru says on June 7, 2011 at 9:10 am:

      @Ian- In the section on student financials, there is an option to select whether you have or have not filed your taxes for the previous year. If you have selected “Will not file”, this could be the reason it’s not requiring any information. For clarification, check out the student financial information section from FAFSAOnline. It will provide a step by step guide to completing this section.

      Reply To This Comment
  17. Laura says on June 3, 2011 at 10:39 pm:

    I files my fafsa back in February and my schools financial aid website said they received. I put down will file with income estimates and submitted it. However, I was unable to go back in and resubmit the actual numbers until about a week ago. Would my school have waited until now to process my aid or would they have started to process it back when I put down will file in February?

    Reply To This Comment
    • Student Loan Guru says on June 7, 2011 at 9:14 am:

      @Laura- If you have not received your student aid report yet, then it’s safe to assume your school waited until the corrections were made. If you do not receive your student aid report within the next couple of weeks, I would contact your school to make sure the changes were received.

      Reply To This Comment
  18. Zac says on May 1, 2011 at 5:52 pm:

    I originally selected ‘will not file’ on my FAFSA because my dad said that as a dependent only working part time I was going to be filed under their taxes. Now he has figured out I made 300 dollars too much to be filed under theirs and now I will have to file my own, but still be listed as a dependent on theirs. I had gotten of EFC rating of 00000. Will correcting my FAFSA at this point make it so that I wont get financial aid or at least as much?

    Reply To This Comment
    • Student Loan Guru says on May 5, 2011 at 8:31 am:

      @Zac- Potentially, this depends on how much you made. To get a rough idea, you can use this EFC calculator to asses both situations. It’s not exact, but it can give you an estimate as to what the change might be! Good luck.

      Reply To This Comment
  19. Nazbit says on February 15, 2011 at 8:38 pm:

    I need help! My school is telling me that they will not give me my financial aid until they get information about my parents’ tax return. The problem is that my father has not filed a tax return this year or last year. Will I not be elegible for financial aid if my parents did not file for taxes?

    Reply To This Comment
    • Student Loan Guru says on February 16, 2011 at 5:19 pm:

      @Nazbit- You can still file your FAFSA to receive aid without your parent tax information. You simply check the “will not file” category when filling out the application.

      Reply To This Comment
      • Karen says on August 5, 2011 at 10:54 am:

        You should probably add a caveat to this answer, that if the father did not file, but is required to file, the student will not be eligible for financial aid until the father files.

      • Student Loan Guru says on August 8, 2011 at 8:44 am:

        That’s a great point, thanks for bringing it up!

  20. Lynda says on February 4, 2011 at 7:34 pm:

    Back to the fafsa question about filling fafsa loans on taxes. Example: We recieved a fafsa loan in 2010. I am filling out all the questions for education credits (AOC and Lifetime learning credit). My 1098-T(tuition statement) only has qualified expenses, scholarships and grants dollar amounts.
    So the question is, do I need to report on my 2010 tax return any student loans that covered the qualified expenses? I’m at a loss because I do not see where I need to report that as well as the 1098-T did not have that information on it.

    Reply To This Comment
    • Student Loan Guru says on February 9, 2011 at 2:43 pm:

      @Lynda- No, you do not need to report student loans because you must pay them back. The number from your 1098-T shows how much money you have spent on qualified expenses, the fact that it came from loans does not matter in this instance. When filling out your credit form, simply use the numbers your 1098-T has provided.

      Reply To This Comment
      • Blanche says on March 21, 2011 at 11:26 am:

        I have a question in the same lines, 1098-T showe’s the amount billed and the scholarshiops or Grants, then turbo tsx asked how much money was paid for expenses my statement includes the pell and Stafford payments the school received, so do i show the total on my tax or just the pell? Help

  21. Norma says on February 2, 2011 at 3:29 pm:

    My son is starting college in the Fall, 2011. I submitted the FAFSA based on an estimated 2010 tax return. I now have all the tax documents I need to actually file my 2010 tax return. However, these are my questions:
    1. For taxpayers who itemize there taxes (as I do), the IRS is telling us that we cannot file until mid to late February due to tax law changes. If I wait until then, does this take my son’s FAFSA “out of the queue” of processed applications until I actually file my taxes (and update the SAR from “will file” to “already filed”)?
    2. If the above is true, (the FAFSA is put on hold), it is better go ahead and file my 2010 tax return now and then later, if required, file an amended tax return.
    Thank you!!!

    Reply To This Comment
    • Student Loan Guru says on February 4, 2011 at 1:55 pm:

      @Norma: Hi, If you have already submitted your son’s FAFSA, the date you file your taxes should not impact the processing. If, when you file your taxes, you realize you need to update your FAFSA information, you can file a FAFSA Correction Form.

      Reply To This Comment
  22. Keri says on January 17, 2011 at 3:59 am:

    Do we have to claim our FAFSA Award money on our taxes?
    If so, do we claim our refund, or our reward as a whole?
    Are there discounts or exemptions for full-time students?

    Reply To This Comment
    • Student Loan Guru says on January 25, 2011 at 10:56 am:

      I’m not quite sure if I understand entirely what you are asking. Some financial aid is subject to taxation. However, financial aid is typically tax-free if the money is awarded and then used to cover tuition, fees, books, supplies and equipment. Expenses such as room and board and stipends used for living expenses are all taxable… But generally, most of your loan amount should not be.

      Reply To This Comment
  23. Joycelyn Ramnarain says on January 15, 2011 at 12:08 pm:

    This was very helpfull.

    Reply To This Comment
  24. Cody says on January 14, 2011 at 7:27 pm:

    So from what I gather, you should file you fafsa early, but if you do…. You will be audited. Correct?

    Reply To This Comment
    • Student Loan Guru says on January 18, 2011 at 4:58 pm:

      @Cody – No. Being audited for your taxes is completely different and separate from being asked to provide verification for your FAFSA Form. Submitting your FAFSA early helps you get the aid that is available first, but of course, it’s reasonable that they ask you verify your estimates afterward. Many applicants end up submitting a FAFSA correction regardless of whether they filed it before their taxes because financial situations change throughout the year. You should not be worried about being audited by the IRS… nor would a financial aid administrator be likely to ask you for much more than a copy of your tax return. Filing a 1040 is recommended most for those who are capable of making accurate estimates at this earlier point in the tax season.

      Reply To This Comment
  25. Emily says on January 5, 2011 at 3:13 pm:

    This was so helpful! I filled out all the information I could for the FAFSA the other day but my dad and I were stuck on this part. We can’t do our taxes until February, so we were really confused. Thanks for clearing things up!

    Reply To This Comment
    • Student Loan Guru says on January 6, 2011 at 12:04 pm:

      @Emily: That’s exactly why we let you know. You can most definitely estimate your taxes for the FAFSA form and correct them later. Best of luck!

      Reply To This Comment
      • Nanette says on January 11, 2011 at 5:50 pm:

        A word of caution about doing an estimated FAFSA. Most of the time, your school will accept whatever you put on the FAFSA as true as long as it seems fairly reasonable. In some cases, however, a FAFSA will be selected for verification. This process is sort of like an audit–you have to provide documentation that what you entered is correct. Usually this involves providing copies of tax returns, but a financial aid administrator who suspects there’s something off can ask for ANY kind of documentation he/she wants and hold up your aid until you provide it. If you or your parents tend to bend the truth when you do your tax returns, you should be aware that using estimated numbers and checking “will file” practically ensures that your FAFSA will get looked at very closely and probably selected for verification. I know-because I’m the one that selects them! We financial aid officers are obligated to do our best to make sure that we are awarding you aid based on correct information. If you tell us you are only estimating, then we have no choice but to verify. This is not necessarily a bad thing–sometimes verification actually leads to a student getting MORE aid if they’ve overestimated income. But usually, it’s the other way around!

      • Student Loan Guru says on January 13, 2011 at 12:12 pm:

        @Nanette – Thank you for bringing up some good points. It’s important that students know that they have to be able to verify their taxes once they do file them.

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