Amended Tax Returns and Affect on Fin Aid

Paying for College
1

Changed CPA from 2013 to new firm in 2014. New CPA did Proforma return for use in FAFSA, based on 2014 income, etc and carry over loss from 2013 return ( 2013 had negative AGI with more loss eligible to be taken in future). Used proforma for FAFSA in early January. Have EFC of 0 based on FreeReduced Lunch in school year 2013-2014. Got Pell Grant and Work Study in public university grant letter issued in Feb for 2015-2016. Have been waiting on CPA to actually do returns so I could use DRT to finalize FAFSA. Finally got return back March 8.

Pointed out to CPA that his associate forgot to use a Charitable deduction (which lowers 2014 payable taxes) and incorrectly marked exemption on both my return and daughter’s return. He removed exemption on daughter’s return and filed 1040. However, in further review of my return, he discovered that 2013 had been done incorrectly by previous CPA with gross errors about the loss. Fortunately, if anything, this should result bigger carry forward loss for 2014 but will require amended return for 2013 (maybe even 3 years back) and thus an amended 2014. Amending 2013 cannot be done before April 15 so 2014 return will use previously filed 2013 info.

  1. Can financial aid can be affected if 2014 tax return isn't filed now, in other words, I file for extension so 2013 can be amended and then 2014 will be correct?
  2. In general, if FAFSA is submitted, is there any particular rush to file Tax Return before April 15 (or extension) that might affect Fin. Aid? There was a delay in getting a necessary document, otherwise I would have had CPA file 1040 in January but I'm not sure that this is actually necessary, other than the good feeling of knowing that its all been done.
  3. She was waitlisted for WorkStudy 2014-2015 year (but not Pell eligible), after going through professional review and verification. No jobs were available for 2014-2015 WS so No fin aid for freshman year. I'm assuming that amended 2013 return will just be water under the dam since I doubt FA is awarded retroactively, even if it would have qualified her for Pell .
  4. What happens if I file now, based on 2013 return and its impact on 2014 and then later amend 2014 return? Do I re-populate FAFSA with DRT after amended return is filed? EFC should be 0 no matter what because of FRL.

This is just all so confusing and stressful. I’ve searched all this site and the internet for answers but can’t find anything that addresses this. Thanks for your help.

2

I’m not sure, but I have two questions: why can’t 2013 return be amended now? why didn’t you qualify for Pell with a $0 EFC last year if 2013/14 was the year you qualified for free/red lunch?

3

It says here that you can’t use DRT if you amend? https://fafsa.ed.gov/help/irshlp10.htm

4

You can get a Pell grant for the same year if you have a change in circumstance ( job loss, death) so call the FL office or look at the website for a form. If your taxes for 2013 are substantially different, that might be an event. If it is not a substantial amount for pell, I’d skip it because it is a form, tax transcript, copies of lots of tax things.

5

mommdc: this is height of tax season and new firm is too busy to amend another firm’s mistakes when they are so busy doing this year’s returns. Didn’t get the notice of FRL for 2013-2014 until March. 2014; filed the application for it in Feb. after loss of major source of income and had already done taxes and fafsa. Request for professional review already submitted when got FRL letter. Told FAO that it existed but it wasn’t taken into account.

6

twoinanddone: I already submitted to FA office for change in circumstance. Told them FRL was received in 2014 (letter said 2013-2014 but wasn’t in effect til 2014) but their review did not result in Pell. Until amended return is done I have no idea if it will be substantially different. Semester will be almost over by the time I get it.

7

So the firm can’t amend 2013 tax return first even if it affects 2014 return with the carry-over loss? So you would have to amend 2014 also in order to have it ready in time for FAFSA, and won’t be able to use IRS retrieval tool then?

That doesn’t make sense to me. If you are trying to get need-based aid earlier would be better than later.

8

Also do you have to pay to get 2013 amended? If it is incorrect the original firm should fix it.