FAFSA application and the IRS Data Retrieval Tool (DRT) - a waiting game

We’re in our first go-around with the FAFSA. Already getting some hard-learned lessons. FAFSA was submitted in late February, with the ‘taxes will be filed’ entry noted.

Our son had modest income but it needed to be reported, since he contributed his earnings to a Roth IRA. We did his taxes on paper and mailed them in 8 weeks ago (next year, we will definitely be filing online).

Going back into his FAFSA, the IRS Data Retrieval Tool cannot find his 2015 return to import those results. Until then, we can’t complete the FAFSA application and we’re on pins and needles waiting to get our financial aid package.

Similarly, requesting a return transcript for his 2015 return doesn’t work;

Calling the IRS to get an update on his return has been a Kafka-esque nightmare. Too long to type about here.

So … a question to FAFSA veterans: how much longer should we realistically expect to wait for the DRT to find his return and bring in the results to his FAFSA?

Why did you have to mail in his return? Couldn’t you have electronically filed it?

I didn’t know contributing to a Roth made it a requirement that you file a return. @BelknapPoint is that true?

Call the schools. See if they will take a signed copy of his tax return in the meantime.

Did you link YOUR parent tax return yet?

Yes, we now know that mailing his return wasn’t the smartest move. Hindsight is great. IRA contributions require corroborating tax returns to validate earned income.

I believe our (parent) return has been linked to his FAFSA; I’ll confirm that tonight.

Wondering if we should re-file his taxes electronically, just to speed things up a bit.

See https://fafsa.ed.gov/help/irshlp14.htm. If your son did not owe any taxes, 8-11 weeks of waiting for paper filed returns. I e-filed my returns, and I’m on second week of waiting.

I’ve seen that table; the 8-11 weeks guidance is for nothing owed or a refund. He owed a modest amount and that was paid in file when he filed. The entry on the table isn’t comforting at all:
IRS will process the tax return in June.
In most cases, the IRS DRT is available within 2-3 weeks after the tax return has been processed by the IRS.

If your son has to pay, didn’t he have to mail his payment?

Yes, payment (in full) was made at the time his 2015 return was mailed - 8 weeks ago. Check was quickly cashed, but that has no bearing on the timeliness of his return being processed, I’ve been told.

I’ve never heard of this requirement for Roth IRA contributions. If the earned income is reported on a W-2 or 1099, I would think that would be validation enough. Of course, if the income is not reported to the IRS by the payee, that’s a different matter. Do you have a source for this IRS requirement?

As to your original inquiry: with a paper return, all bets are off. Since you originally completed FAFSA with a “will file” tax status, I would go back into FAFSA, update the tax filing status, and update any numbers that have changed now that taxes have been filed, and resubmit FASFA. If the school(s) want corroboration with a tax return, offer to provide a copy of the paper return that was filed. I think that this is the best that you can do until the IRS sorts through all the paper returns that they have received and processes yours.

For future reference: if you’re comfortable doing your own tax returns, use Free File Fillable Forms on the IRS website. It’s better than paper forms and with free electronic filing you avoid the issues with mailing a paper return.

So your son had to file a return. But it wasn’t because he contributed to a Roth IRA. It’s because he had incurred a tax obligation.

If your son only had $1,000 of earned income for the year with no income tax withholding and used $500 of that to open a Roth IRA, there wouldn’t be any requirement or need to file a federal tax return (as far as I know), because the full amount of income would be covered by the standard deduction (there would be no tax obligation).

To the OP…did he contribute ALL of his earnings to a Roth?

It doesn’t matter now. He filed a paper return and has to wait, you can’t file another tax return to make it process faster. The school should understand that and it shouldn’t change the award, just that the FAFSA can’t be finalized until the DRT works or the son can send in a tax transcript.

Last year we were very late in getting the tax transcript, the FSA ID, and thus getting the DRT to work. Nothing changed on the financial aid awards, it’s just that they weren’t finalized until JULY! We missed the May deadline to use the DRT with the old system (by ONE day,) and then while we were trying to get FSA ID (both daughter and I had to try 3 times to get it to work), the IRS changed the method to order tax transcripts and that took an extra week or two.

Not really a big problem except that D2’s bill is due on Aug 1 and nothing had been finalized. The school actually said to not pay the bill and let everything post first.

Yes, all earnings went to the Roth IRA. No W-2 was involved. Self-employment income.

And to add more to my frustration, calling the IRS an hour before they close is a fools errand. I need to call from home to be physically near my son, so he can authorize me to ask questions on his behalf (even though I’m listed on his 1040 as a third party designee - the form they can’t yet find). After wading 5 minutes through the menu prompts, I get a recording that basically says, ‘too busy, call tomorrow.’

Trying to do anything by telephone will just be an exercise in frustration. All you can do is wait. The IRS is underfunded and therefore understaffed. They will process the paper return when they get to it. In the meantime, try to update the FAFSA with new information based on the filed return.

Good points; I’m perhaps foolishly just trying to get ‘authorized’ to ask questions about his return. I suspect, in the end, that the answer will still be “keep waiting.” Can’t agree enough with underfunded and understaffed. Meanwhile, the FAFSA is written to match his 2015 return.

I think his reason for being required to file was his self employment status, not his contributions to a Roth IRA.

Regardless. At this point all you can do is update the FAFSA mulls and resubmit saying taxes are completed. Then link to the IRS DRT as soon as you can.

Is using the DRT mandatory? I always thought it was a time-saving help if you had electronically filed your taxes, but that you could still fill the information into the FAFSA manually.

@JayDee12 many schools now require linkage to the IRS DRT because that actually verifies that the information you put on your FAFSA is correct from the tax return.

OP, we ran into a similar problem last year. D owed less than $20 and sent a check. Even though all return filing was electronic, the physical check caused big delays. Check was cashed in Feb and DRT was available in late May.

One thing we did while we were waiting (we didn’t know DRT would be available in late May at the time) was contact our congressman’s office. They informed us that the IRS typically didn’t do any processing where payments were made until June. They volunteered to contact the IRS on our behalf and were able to send us a copy of the transcript. At about the same time, the DRT was made available to her in fafsa. Not sure if the congressman’s office request spurred the processing, but it might have. You could give that a try.

Lesson - If timing of FA is a concern, estimate taxes and be sure enough is withheld so no tax payment is required :slight_smile: