How Do We Complete Verification When No 1040-X Was Filed But the IRS Corrected the Tax Return?

Sometimes, the IRS will make minor internal corrections (e.g., math errors) while processing the tax return without requiring the individual to file a 1040-X amended tax return. The tax filer receives a notice from the IRS listing the corrections. These corrections are still considered amended tax data. Starting with the 2024-25 award year, the corrected/amended data will be transferred into the FAFSA using the FUTURE Act Direct Data Exchange (FA-DDX), or it will be manually entered by the FAFSA contributor if the FA-DDX cannot be used. There will be no IRS Request Flag or amended tax return indicator on the FAFSA, in the FA-DDX, or on the Institutional Student Information Record (ISIR). There will also not be any postscreening to pick up amended tax data processed after the FA-DDX was used. Therefore, unless you somehow find out on an ad hoc basis that their tax data were corrected/amended after the FAFSA was filed, there should be no need to verify these individuals as amended tax filers. You would still need to verify them under the documentation requirements for non-amended tax filers in the September 19, 2023 Federal Register.

If, for some reason, you find conflicting information and need to verify the individual using amended tax data, you follow the documentation requirements below. You may not be aware that the tax filer did not file a 1040-X until you attempt to collect one and are notified by the filer that an adjustment was made by the IRS. The individual does not need to file an amended tax return and will not have a 1040-X. In these instances, the school needs a combination of documents to complete verification.

You need either one of the following:

• Any letter or notice from the IRS indicating the changes the IRS made to the individual's tax return data items; or
• A Tax Account Transcript, which shows any amended tax data items.

In addition to one of the above documents, you also need either one of the following items:

• Updated income and tax information from the IRS on an ISIR record with all tax information from the original tax return;
• A signed or unsigned IRS Tax Return Transcript containing information from the original tax return filed with the IRS or any other IRS tax transcript containing all income and tax information from the original tax return that is subject to verification; or
• A signed copy of the IRS Form 1040 for the applicable tax year and the applicable schedules that were filed with the IRS.

Alternatives In Any Case: The Tax Account Transcript can be used in conjunction with a Tax Return Transcript or signed copy of the tax return (with applicable schedules) to complete verification without any of the other items listed above. An IRS Record of Account Transcript can be used by itself (without any of the other items listed above) to complete verification of the income data; however, the IRS Record of Account Transcript may be more difficult to interpret and may require the assistance of the IRS or a tax expert.

The school does not need to collect any further proof that the individual either did not file a 1040-X or is not required to file a 1040-X.

More Information: Reference the Federal Register and ED's Verification Program Integrity Q&A DOC-Q2/A2. Also see AskRegs Knowledgebase Q&As, Does the FA-DDX Include Amended Tax Return Data?, and, What Documentation Is Required To Complete Verification When an Individual Files an Amended Tax Return?