<p>My CPA just informed me that the IRS is warning Congress that they need to get final decisions wrapped up for 2012 or we will be in a pickle for filing season. She said she may not be able to complete my return until mid-February or possibly as late as mid-March. Has anybody else heard something similar?</p>
<p>As for filing FAFSA, would I be able to file to the best of my knowledge and skip using the IRS Data Retrieval Tool? Would it be preferable to wait until my 1040 is actually filed?</p>
<p>Not just this year but any year, it’s best to fill out FAFSA as soon after Jan. 1 as possible using the very best estimates you can. You check the ‘Will File’ status. If all income is W-2 wages, interest and other more simple kinds of income it is easy to do a good estimate with year end statements and pay stubs. It’s much harder to do the estimate for self-employed people, business owners and other more complicated situations. After taxes are filed you check the ‘Have filed’ status and can use the IRS retrieval tool.</p>
<p>As far as I know, the only thing up for grabs affecting 2012 taxes is the AMT adjustment. I don’t think there is anything that will delay companies and banks from sending out W-2s and 1099s etc. for 2012. So at the point all those are received you could update FAFSA if necessary keeping the ‘Will File’ status until you actually file.</p>
<p>Thanks for the reply annoyingdad. That was basically what I was thinking. They can’t really make decisions that will change 2012 much. Well, they pretty much did at the end of 2010 when they decided to extend the break on capital gains tax, but there doesn’t seem to be too much chance of something like that happening again. Besides, income is income in the eyes of FAFSA whether it gets taxed or not.</p>
<p>I haven’t been through the FAFSA process before, so I didn’t realize you could file right away, then go back and update it later. That definitely sounds like the way to go. I will know what my numbers are from my final pay stub and my December bank statements. No need to wait for them to send me 1099’s and W-2.</p>
<p>Still file as soon as you can and then it takes about a week after e-file and then use the retrieval tool. If you are chosen for FAFSA verification you would have to either use the retrieval tool anyway or order and send in a tax transcript. If you owe money on your return, don’t wait to pay it. It will delay using the retrieval tool or ordering a tax transcript until you do pay it.</p>
<p>Hopefully your pay stubs are well organized. Your final one should have a YTD gross. From that subtract all pre-tax YTD totals: medical and dental premiums, standard 401k contributions and flexible spending accounts. There may be others that I can’t think of right now but hopefully they are all listed together in one section of the pay stub. One tricky thing is the need to add the YTD cost of life insurance provided by the company over the amount of $50000 which is taxable. If that pertains it should be listed on the stub somewhere.</p>
<p>The YTD amount contributed to a standard 401k will have to be reported for the appropriate FAFSA question.</p>