Amended Tax Return 1040x and FAFSA®

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The relationship between your amended tax return (1040X) and FAFSA® is relatively simple. When you fill out your FAFSA®, one of the questions asks whether you filed a Form 1040X, Amended U.S. Individual Income Tax Return. If so, you cannot use the IRS Data Retrieval Tool to transfer your financial information to your FAFSA®.

What Is Form 1040X?

If you need to make changes to your tax return after filing, you can use Form 1040X to file an amendment. Form 1040X can be used to correct forms 1040, 1040A, 1040EZ, 1040NR, or 1040NR EZ.

What Is the IRS Data Retrieval Tool?

Financial need is one of the biggest factors in determining how much student aid you are eligible for. The Free Application for Federal Student Aid (FAFSA®) collects information about your financial situation to help schools make that determination.

When filling out the FAFSA® online, you have the option of using the IRS Data Retrieval Tool (IRS DRT) to populate some fields with information from your tax return. This tool will be found on the “Student Financial Information” page of the FAFSA®. You will first answer questions that determine if you are eligible to use the IRS DRT; if you are, you can click “Link to IRS.” You will need to answer some authentication questions, then information from your tax return will be used to fill in the appropriate fields on your FAFSA®.

To use the IRS DRT, you will need your Social Security number and your FAFSA® ID. This same tool can also be used by parents in the “Parent Financial Information” section.

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How Has the IRS Data Retrieval Tool Changed?

The IRS DRT was taken down in March 2017 due to concerns that identity thieves might use it to file fraudulent tax returns. Those concerns were addressed with additional security and privacy measures, and the IRS DRT tool returned for the 2018-19 FAFSA®. Now, when you use this tool, you will not be able to see the information transferred from your tax return. Instead, affected sections will read “Transferred from the IRS.”

New changes to the verification requirements

On January 9th, 2019 the Department of Education released guidance on the verification process. The new policy changes will ease the burden on students, families, and financial aid administrators and ensure easier access to federal financial aid.

The modified policy will allow copies of tax returns and written statements of non-filing to be accepted for verification purposes in lieu of obtaining IRS tax return transcripts and verification of non-filing (VONF) forms for all years following the 2018-19 application. This means, that families won’t need to prove or provide a written statement that they attempted to obtain their tax return transcript or use the IRS Data Retrieval Tool. You may not know this, but prior to this policy change, many families had to go through an intensive process to verify their IRS filing status.

How does the new policy affect an amended income tax return?

Well, now financial aid administrators can accept a signed copy of the IRS Form 1040x. As a result, many families will be able to easily verify their IRS filing status, regardless of any corrections they previously made to their income tax forms. The 1040x form must be filed by the IRS for the applicable tax year or  documentation from the IRS that includes the change(s) made to the tax filer’s tax information by the IRS, as well as one of the following:

  • A signed copy of the IRS Form 1040 that was filed with the IRS
  • A transcript obtained from the IRS that lists the tax account information of the tax filer(s)
  • IRS Data Retrieval Tool information with all tax information from the original applicable year income tax return

Do I Need to Update My FAFSA® If I File an Amendment?

If you filled out your FAFSA® using the IRS DRT and then filed a 1040X amendment, contact your school. Once your FAFSA® has been submitted, you cannot make changes to information filled out by IRS DRT. However, your school can make the corrections on your 1040X into account and make manual changes to your FAFSA® if appropriate.

Most information on your FAFSA® needs to be accurate as of the day you submitted the application, which means that many fields cannot be updated. However, you are required to update any information that changes your dependency status, except for your marital status.

Because the FAFSA® relies on a past year’s tax information (2019 for the 2021-22 FAFSA®), your application may not accurately reflect your current situation. If something about your financial situation has changed and you cannot update your FAFSA® to reflect the new information, speak to your school’s financial aid office for clarification and assistance.