The IRS Data Retrieval Tool (IRS DRT) allows applicants to transfer income and tax information from their federal income tax returns into the Free Application for Federal Student Aid (FAFSA), simplifying the FAFSA. Both students and parents may be able to use the IRS Data Retrieval Tool.
Benefits of using the IRS Data Retrieval Tool
The IRS Data Retrieval Tool saves time, since it completes about a page worth of questions on the FAFSA. It improves the accuracy of the FAFSA, since tax return data is more likely to be correct. It also reduces the odds of the student’s FAFSA being selected for verification, since data elements transferred from federal income tax returns are not subject to verification.
When does the IRS Data Retrieval tool become available?
The IRS Data Retrieval Tool becomes available at the start of the FAFSA application season on October 1.
Since the FAFSA is based on the prior-prior year (PPY) income and tax information, most families will already have filed their federal income tax returns on April 15, nearly six months prior to the FAFSA start date.
Even families who get an automatic six-month extension on filing their federal income tax returns will have filed their federal income tax returns by October 15.
One exception is active duty members of the U.S. Armed Forces who are serving in a combat zone. They can delay filing federal income tax returns until 180 days after the end of their deployment. But, most of them will provide a power of attorney to a friend or family member back home who will file their federal income tax returns.
Federal income tax return data becomes available for use in the IRS Data Retrieval Tool about two to three weeks after the federal income tax return is filed electronically and about six to eight weeks after filing a paper federal income tax return. There may be an additional delay in the availability of the IRS Data Retrieval Tool if a payment is due on the federal income tax return.
Thus, if a taxpayer had an automatic six-month extension and filed their federal income tax returns on October 15, they might not be able to use the IRS Data Retrieval Tool until November (electronic) or December (paper). Such taxpayers may wish to enter income and tax information into the FAFSA manually and later use the IRS Data Retrieval Tool to update the FAFSA with actual tax return data.
Who can use the IRS Data Retrieval Tool?
To use the IRS Data Retrieval Tool, the taxpayer must have a valid Social Security Number and FSA ID.
Undocumented parents who file the FAFSA with 000-00-0000 instead of a Social Security Number or who file federal income tax returns with a Taxpayer Identification Number (TIN) are not eligible to use the IRS Data Retrieval Tool.
Taxpayers who file an amended federal income tax return (1040X) may use the IRS Data Retrieval Tool. The IRS Data Retrieval Tool will transfer the original income tax return data to the FAFSA, not the amended tax return, but will flag the FAFSA as involving an amended federal income tax return. The college financial aid office will ask the taxpayer(s) to provide a signed copy of the amended federal income tax return.
The following taxpayers are not eligible to use the IRS Data Retrieval Tool.
- Taxpayers who have a different address on the FAFSA and their federal income tax return cannot use the IRS Data Retrieval Tool. The two addresses must match.
- Married taxpayers who file separate federal income tax returns, such as Married Filing Separately and Head of Household, cannot use the IRS Data Retrieval Tool. The IRS Data Retrieval Tool is not currently capable of combining information from two returns. This may change in the future.
- If the student’s parents are unmarried or never married, but live together, they are treated as though they are married on the FAFSA. Again, the IRS Data Retrieval Tool is unable to combine the information from separate federal income tax returns.
- If the taxpayers’ marital status changed after the end of the tax year, they cannot use the IRS Data Retrieval Tool. This includes changes in marital status from married to separated/divorced and from unmarried to married. The IRS Data Retrieval Tool cannot split a joint return into separate figures for divorced or separated taxpayers. Nor can the IRS Data Retrieval Tool currently combine income and tax information for taxpayers who were divorced or separated during the base year but who are now married.
- If the taxpayer files a Puerto Rican or foreign income tax return, they cannot use the IRS Data Retrieval Tool, even if the foreign tax return is filed in addition to a U.S. federal income tax return. This includes taxpayers who live in the Freely Associated States (Republic of Palau, Republic of the Marshall Islands, and Federated States of Micronesia).
- Taxpayers who are victims of tax-related identity theft cannot use the IRS Data Retrieval Tool until their case is resolved, which usually takes eight to 11 weeks after the identity theft is reported to the IRS.
What happens If the FAFSA is selected for verification?
Data elements that are transferred by the IRS Data Retrieval Tool will be identified as “Transferred from the IRS” on the FAFSA. The student and parents will not be able to see the transferred data. These data elements will not be subject to verification.
If the taxpayer did not use the IRS Data Retrieval Tool and the FAFSA is selected for verification, there are two options. One is for the taxpayer to use the IRS Data Retrieval Tool to update the information on the FAFSA. The other option is for the taxpayer to obtain an IRS Tax Return Transcript. Taxpayers are no longer permitted to provide a copy of the signed federal income tax return because some taxpayers previously supplied fake copies of their tax return.