Does the FA-DDX Include Amended Tax Return Data?

Award Year: 2024-25 KA-36593 Helpfulness Rating 2,754 page views

This guidance is specific to the 2024-25 award year and later.

Yes. According to guidance NASFAA received from the U.S. Department of Education (ED), if a 1040-X amended tax return was filed and processed by the Internal Revenue Service (IRS) before the FAFSA was filed, and if federal tax information (FTI) is successfully transferred, the FAFSA will contain the amended tax return data. This includes IRS corrections to the tax return that do not require a 1040-X. In either case, the IRS will make available the tax data it has on file at the time the FTI is transferred using the FUTURE Act Direct Data Exchange (FA-DDX). If the tax return has been amended and processed by the IRS, then the amended data will transfer. If the tax return is not yet amended, or was amended but was not yet processed by the IRS, original data will transfer and will not change if an amended return is filed and processed at a later date.

According to the September 19, 2023 Federal Register and GEN-23-12, if FTI is pulled in via the FA-DDX and is unchanged, the school can consider those data elements to be verified. There will no longer be an IRS Request Flag of "07" or any other indicator to alert the school of an amended tax return or IRS corrections. There will not be any postscreening process to pick up amended tax returns that were filed after FA-DDX was used, or corrections were made by the IRS. There is no requirement to actively ask whether a student or contributor filed an amended tax return or the IRS corrected the data.

As a general rule, the school will only need to follow up and verify the amended tax information when they find out on an ad hoc basis that an amended tax return was filed after the FAFSA was filed. This would still be conflicting information that needs to be resolved. Additionally, according to ED, there may be limited circumstances where an IRS processed change to FTI after a FAFSA is processed appears in the FA-DDX and may be transferred into a subsequent ISIR if certain circumstances of a subsequent ISIR push occurs (unrelated to FTI). Here again, if the school somehow learns that this has happened, it will need to follow the amended tax return documentation requirements.

Otherwise, you follow the verification requirements for regular, non-amended tax filers.

Note the IRS tax return processing timeframes.

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