<p>My parents normally file taxes but had to skip and are still skipping 2012 due to filing price/owing large amounts from past years.</p>
<p>My mother was completely unemployed and father partially unemployed all of 2012, so gross income went down drastically (80,000 to 40,000). This of course prompted verification from the college (California University of PA). They requested 2012 W2 forms and return transcripts from everyone. I filed my taxes for 2012 as a dependent, but alas I can not supply a transcript for my parents.</p>
<p>Do I have any options since they are refusing to file?</p>
<p>No. Your parents are required to file a return for 2012. If they don’t do so, you cannot receive federally funded need based aid.</p>
<p>Options:</p>
<ol>
<li>Parents file 2012 return ASAP.</li>
<li>Defer enrolling in college until you are 24 years old and no longer need parental info for aid.</li>
<li>Attend a college where you can pay without aid.</li>
<li>Take a gap year, work, save money, and pray your parents get their tax house in order for next year.</li>
</ol>
<p>I’m not a tax expert…but not filing a return when you are required to do so carries interest and penalties as well.</p>
<p>ETA…turbotax costs $49.99…cheaper than the penalty for not filing.</p>
<p>Try to get your parents to speak with someone about this. Owing past taxes shouldn’t prevent them from filing. All they have to do is file - they don’t have to pay the taxes. The schools don’t need proof of payment - just proof of filing.</p>
<p>If they have such a low income, they might not owe anything - and in fact they may get a significant refund if they are eligible for the earned income credit. They need to file, and should be able to do so for free online (check the free file link on the IRS website). There are also agencies that will prepare the return for free if they are low income, unless there are specific forms they are not qualified to file. If they do not qualify because they need specific forms, they can file through a paid preparer and have the fees taken from the refund - even if they owe the IRS back taxes. They will end up owing them those fees if the IRS uses the full refund to pay back taxes, but the taxes will be filed, and you can get your aid.</p>
<p>I have had dealt with many clients in the past who chose not to file because they were afraid they would owe. In some cases they did - and they ended up owing more because of late-filing penalties. In many cases, it turned out they got refund - and the IRS doesn’t pay interest if you wait to file. It’s in their best interest to file, if they have all the paperwork.</p>
<p>I have filed returns via taxslayer.com, which has many state returns as well and is free if accessed via the above-mentioned website if you are eligible; also, it is extremely cheap even if you have to pay (like less than $20 including electronic filing). Just a Q&A process.</p>
<p>Your parents should know that even if they don’t pay what they owe, the penalties are much less than if they don’t file.</p>
<p>Especially if you have siblings, they most likely don’t owe anything for 2012 and may have a refund coming.</p>
<p>Once 2012 is out of the way, it will be easy to file for them for 2011.</p>
<p>To the OP. can you work part time and attend a community college part time? Many students pay their own college costs by doing this.</p>
<p>Another option…look for some nearby colleges that provide tuition for courses to employees…and apply for ANY job at one of those schools.</p>
<p>Re: taxes…if the family owes money, I don’t believe their IRS transcript will be released until they pay the tax bill. For financial aid purposes, they need to file and pay.</p>
<p>However, as noted, filing is less expensive than paying the penalties for not doing so if you are required to do so.</p>
<p>This is not correct. If money is owed, processing of the return will be delayed until May, and the transcript cannot be released until the return has been processed. For a return filed in January or February, for example, the transcript will generally be available by the third or fourth week of May.</p>
<p>So, owing money can delay the release of the transcript, but it will not prevent it.</p>
<p>Dodgers…if they owe the IRS…can they receive need based aid? I thought the bill needed to be paid before disbursement of funds.</p>
<p>Also, clearly, this family did not file in January or February. If they file NOW…how long will it take for their return to be available to the school.</p>
<p>To the OP…are you a high school senior? At this point, the only aid you likely would receive would be a portion of the Pell grant (if you are eligible…), and a $5500 Direct loan. Would that cover your college costs?</p>
<p>Sylvan, most schools now either want to be able to use the IRS retrieval tool, or have a tax transcript sent. Neither of these options is available until the taxes are filed.</p>
<p>No, the one has nothing to do with the other. Keep in mind that the unpaid taxes are the parents’ obligation; the loans and/or grants are going to the student. </p>
<p>As far as timing goes for a parent that files a return now . . . I just don’t know. Since the IRS does begin processing returns with taxes owing in May, I would anticipate that the delay for returns filed during or after May would not be significant, but that’s just a guess.</p>
<p>Regardless…at this point in time, if the student is JUST completing a FAFSA, I would venture that the only aid they would receive would be the $5500 Direct Loan, and whatever portion of the Pell they are entitled to.</p>
<p>OP…how much money do you need to attend college? The Pell and Direct Loans would likely cover your tuition costs at a community college IF you commuted from home. These forms of aid would not cover your costs of attending a residential college.</p>
<p>For purposes of disbursing aid, it technically does not matter whether or not the parents paid a tax bill. What DOES matter is whether or not the DRT can be done or tax transcript can be obtained, assuming the student was selected for verification of an income item. If selected for verification of an income item, the school CANNOT disburse ANY federal aid until the DRT is done or a tax transcript is obtained. If the DRT/transcript are not available until the tax bill is paid, then the aid cannot be disbursed. If the DRT/tax transcript is available before the tax bill is paid, the money can be disbursed.</p>
<p>Whether or not taxes are paid is irrelevant for aid purposes - but if not paying means no DRT/transcript, a student selected for verification of income is out of luck until that bill is paid.</p>
<p>I’m assuming though that the OP’s parents owe for previous years. So if they file their 2012 return and pay that if they owe, or get a refund, then that will be sufficient for their FAFSA. They will stil owe the IRS for the previous years, but that won’t holdup 2012’s DRT</p>
<p>Of course if they have a refund coming, it will be held by IRS for prior year obligations. All the more reason to file, and then file for the prior year where the burden will be less because of the refund money being held. And then they can request a reduction in the amount they owe because of their reduced circumstances:
[Offer</a> in Compromise](<a href=“http://www.irs.gov/Individuals/Offer-in-Compromise-1]Offer”>Offer in Compromise | Internal Revenue Service)
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances:</p>
<p>But they need to file first, for this year and last year too.</p>