We are household that reports about $145,000 income from last year. We filled out the FAFSA this past weekend and had the IRS automatically transmit and autofill their portion. Our expected family contribution came back almost $80,000!!
We double checked the numbers that we input and everything is correct. All of the etc estimators show that we should be closer to the $25-$30,000 range at the most.
We emailed with FAFSA and they told us there is no way we can see what numbers the IRS imported, to see if they are accurate. Our 1040 is accurate (CPA prepared and double checked).
The only thing we can think is on our 1040, in box 5a (pensions and annuities) it showed we rolled over almost $100k into an IRA from an old 401k. So it’s almost as if the IRS is reporting that as income, which of course it isn’t. But since we can’t see what the IRS transmit it, we can’t see if that money is being included.
Does anyone have any idea what avenues we can pursue from here?
Thank you so much for any help you can provide, we are totally new with us and in way over our heads apparently!
The rollover is the issue. On FAFSA, there is a tiny little box that asks if you had a rollover…lots of people miss that. I don’t think you can fix this on your own…you will have to ask one of your college’s financial aid offices to fix this for you. Any additional insight @kelsmom?
ETA: Note that FAFSA will add back to income any 401K contributions you made in 2021…because that’s considered a choice to fund your 401K rather than college. So make sure you include your 401K contributions in 2021 when you run college net price calculators (which you should do to get cost estimates at the school level).
The issue is definitely the rollover. It has been an issue ever since the IRS Data Retrieval began. I asked about it at a Federal Student Aid conference years ago, and I was told that it’s not a big enough issue from their point of view to merit a fix. So OP will need to contact the school (or schools, if this is an incoming freshman) to tell them what happened & ask what they require to fix it on their end. They will request documents to support your claim that it was a rollover. Those documents are easy to get/provide, and it’s an easy fix once the financial aid staff gets to it. A pain, but not too difficult to fix in the scheme of things.
Same type of thing happen to us last year! It’s absurd - I don’t even want to fill it out for my next kid (graduates HS in May), but I am told that in order to receive merit aid, the FAFSA is required.
I don’t think most schools require it for merit. That said, I’m glad we always fill it out because 3 of our kids got Covid relief checks which wouldn’t have happened if fafsa wasn’t filled out.
Thank you! You are all so helpful. We’ve been on the phone with FAFSA, the IRS, our CPA…just knowing other people have experienced makes me feel better!
Can we nominate Kelsmom for “poster of the decade” at some point? Always helpful, straightforward, and eager to lend a hand on the “mysteries” of financial aid!
There is a small spot on the FAFSA to check that you had a rollover. Did you check that? If not, you will need to contact EACH college and submit to them the proof of the rollover. This is corrected at the college level. Otherwise, this rollover is counted as…income.
The user experience is indeed terrible because this checkbox is on a page where everything else is filled in by the IRS DRT, and it is really hard to understand that it is the exception.
Even being on the lookout for this checkbox two or three years ago as I had a small rollover and was aware of the issue thanks to this forum, I had a hard time locating it!
It would be so easy to just add a label next to checkbox that says something like “You must manually make a choice even if you used the IRS DRT.”…
@kelsmom do you know exactly where the box is??? I know about this glitch, but for the life of me I don’t see where it is!!! I’m about to give up and just enter it manually, but I’ll search one last time! Thanks!
If I recall correctly, the question comes up while you are doing the tax import using the DRT. It’s a pop up box, I think, on the right side. Make sure you don’t have pop ups disabled when you are completing the FAFSA.
My last FAFSA was about a year ago, and my last rollover even earlier, but I do not recall a popup. Rather I recall a small checkbox in the middle of one page under the “Parent Financials” section.
My recollection is that all the fields under the “Parent Financials” section showed “Transferred from the IRS” except for one little checkbox talking about rollover which was not checked, but that could have mistakenly been understood as also having been filled by the IRS DRT because it is not an input field like the other fields on the page.
Trying to figure out where it could have been based on the paper form, I think it is likely to show up around FAFSA question 89e as I suspect that the IRS DRT messes things transferring amounts from Form 1040 lines 4a, 4b, 5a, 5b, which do not clearly indicate if they are the result of a rollover.
Thinking further about it, I think that in the past the problematic part of the page looked something like this:
"Untaxed portions of IRA distributions from IRS? Transferred from the IRS
Did the untaxed portions of IRA distributions include rollover(s)? No" <== THIS IS THE PROBLEM
I believe that the problem is that the checkbox defaulted to No, as it is not an answer that can get filled by the IRS DRT, since there is no way for the IRS DRT to know because the IRS Form 1040 does not have the info (Rollover would be manually written on the form, see ref below!).
You therefore need to manually answer Yes if you made a rollover.
If you do then you will get access to the question looking like “Enter the rollover amount(s)” where you can manually input the amount.
Thank you both! I guess I could try the drt and not save it if I can’t find the box? I didn’t go that far last time because I was afraid I had already missed the question!
Yes, you can do this … and let us know if it looks like @NJEngineerDad remembers it looking. It probably does (I don’t have access to the system to see now that I’m not working in financial aid), but it would be great to have a definitive answer to this very common question!