Letter of Interest for Business Rental - PowerPoint

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					Understanding Tax Returns in
   Financial Aid and the
    Verification process




                       ** Client Confidential **
F. Duane Quinn
Director of Training and Development

American Student Assistance (ASA)

quinn@amsa.com



                                 ** Client Confidential **
 Forms: Non-filer
 Grossunder $7850. and not claimed by
 another

 Claimed   by parents, but gross less than
 $4700.

 Not   owed a refund of withholding

 Unearned    income < $700
                                       ** Client Confidential **
     Forms: 1040EZ

 Singleor married (filing jointly); no
  dependents

 Income only from wages, salaries, tips
  and < $50,000

 taxable   interest income <$400.

 Will   claim standard deduction
                                          ** Client Confidential **
    Forms: 1040EZ

 Changes   for 2002:

 – Remove Rate Reduction Credit Line 7

 – Earned Income Credit moves to line 8

 – Tax paid moves to 10



                                          ** Client Confidential **
    Forms: 1040A


 Income    under $50,000., wages, salary

 Will   take standard deduction

 Can    get IRA; Hope; Student loan
  interest deduction


                                       ** Client Confidential **
   Forms: 1040A
 Changes   for 2002:

 – Removal of Rate Reduction Credit line 30

 – Tax paid becomes line 36

 – EIC moves to 41

 – Additional Child Tax credit moves to 42


                                       ** Client Confidential **
       Forms: 1040 - Must use to…..
 Report  non taxable interest, dividends,
  capital gains
 Claim Itemized deductions
 Claim deductions for: moving expenses,
  payment of alimony, SEP
 Parents reporting child’s Interest & Div...
 Business; Rental; Trust; Partnership



                                        ** Client Confidential **
      New on 1040 for 2002
   New Off-sets to Total Income (Educator
    and Tuit. And Fee) AGI moves to line 35

   Eliminate Rate Reduction Credit line 47

   Taxes Paid moves to line 55

   Earned Income Credit moves to 64

   Additional Child tax credit moves to 66
                                        ** Client Confidential **
    Forms:1040 Some Schedules
 “A”   : Itemized Deductions
 “B”   : Interest and Dividend Income
 “C”   or “C-EZ” : Business Profit / Loss
 “D”   Capitol Gains and Losses
    : Supplemental Income (Rental,
 “E”
 Partnerships, Trusts)


                                         ** Client Confidential **
    Forms: Letter 1722 (DO)
 Transcript   of Tax Information

 Request and receive “on the spot” with
 proper identification.

 Acceptable    for verification

 RTFTP     -issued when 1722 not available

 Letter   2951C; 8055C; 8059C

                                     ** Client Confidential **
        Federal Tax Forms and
        Verification

   Federal tax returns
    form the backbone
    of the official
    verification process




                                ** Client Confidential **
     Federal Verification
 Applications   with Conflicting Information
  – Must resolve all; even if not selected

      all selected; but not in excess of
 Verify
 30% of “applicants”
  – School policy on selection of students to be
    verified
  – School policy on definition of “applicants”


                                             ** Client Confidential **
     Documents to Collect:
 Federal  Verification Worksheet or
 Institutional Form

 Appropriate   Tax Document
  – Original signature; copy; preparer stamp
    (copy) are all OK

 “Other”   if necessary

                                          ** Client Confidential **
     Required Verification Items


 Household    Size
 Number    in College
 Adjusted   Gross Income
 U.S.   Income Tax Paid
 Certain   Untaxed Income / Benefits

                                        ** Client Confidential **
     “Certain” Untaxed Income
 Untaxed     Social Security Benefits
 Child   Support
 IRA   / Keogh Distributions
 Foreign    Income Exclusion
 Earned     Income Credit
 Interest   on Tax-free Bonds
                                         ** Client Confidential **
     Required Verification Items
     from Tax Returns

 Adjusted   Gross Income (AGI)

 U.S.   Income Tax Paid

 Some    Untaxed Income / Benefits



                                      ** Client Confidential **
                 Verification Items from Tax Returns

Taxable Income              1040 EZ IRS 1040 A       IRS 1040               Telefile

Adjusted Gross Income       Line 4   Line 21         Line 35                Line I

U. S. Tax Paid              Line 10 Line 36          Line 64                Line K

Untaxed Income
Earned Income Credit        Line 8   Line   41        Line 64               Line L
Add. Child Tax Credit       NA       Line   42        Line 66               NA
Untax. SS Benefits          NA       Line   14a - 14b Line 20a - 20b        NA
Tax Exempt Interest         NA       Line   8b        Line 8b               NA
Untaxed IRA Dist.           NA       Line   17        Line 24 + 31          NA
Untaxed Pen. and Ann.       NA       Line   12a -12b Line 15a - 15b         NA
IRA / Keough Deduction      NA       Line   17        Line 24 = 31          NA
Foreign Income Exclusion    NA       NA               Line 21               NA
Cr. Tax on Special Fuels    NA       NA               Line21                NA
                                                            ** Client Confidential **
       Remember!!!!!

   Other required
    verification Items not
    found on IRS forms:
    – Child Support Rec’d
    – Welfare
    – Household size not
      always = exemptions
    – Number in college



                             ** Client Confidential **
  Verifying Child Support:
 Signed   Verification Worksheet
  – or
 Statement   signed by Parent and
 Student
  – or
 Copy  of Divorce Decree / Canceled
  Checks / Statement of non-custodial
  - or
 Not required to verify if same amount as
  was verified last year
                                     ** Client Confidential **
    Verifying Household Size

 Signed   Verification Worksheet

 Institutional   Form

 Signed  Statement with names; ages;
  relationship to student


                                    ** Client Confidential **
     Household Size (Cont’d)
 Not   need to verify if:
  – SAR / ISIR within 90 days of signature

  – same as verified last year

  – Married- 3 / Single - 2

  – Independent single with HH of 1 or
    married -2
                                             ** Client Confidential **
        Verifying Number in College
 Signed   Verification Worksheet
 Signed Institutional Form
 Signed Statement with names; ages;
  institutions

 NotRequired if: SAR w/in 90 days of
 signature; Enrolled at your school;
 number in college is 1

                                    ** Client Confidential **

				
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