tax-468440_640By now you may have received a notice from the colleges to which your student has applied that they need a FAFSA. While you may not yet have even started to think about your tax return, it is not too early to complete your FAFSA.

The first thing you should do is go to FAFSA.gov. DON’T go to FAFSA.com or you will be charged $80 to complete a free application.

Once you go to the official FAFSA website you will need to register so follow the instructions to do so. You will need two PIN’s. One for the student and one for a parent. Only 1 parent needs a PIN, not both. Make sure that you save the login information since you will need it for the next 4 years.

Once you login you can start completing the FAFSA. Assuming that you have not yet done your taxes from the most recent completed year, you can estimate your income by using tax returns from the year before, or if your situation has changed, use your best estimates. On the asset side, use the value of your assets as they are as of the time you fill out the form.

A few things to remember:
  • Do not list the value of your primary residence (home)) anywhere on the form. You do have to list the value of a second home you might own.
  • Also, the value of your qualified retirement funds should not be included. Qualified retirement is a 401(k), IRA, SEP, pension, etc. You will have to list the amount that went into your retirement fund during 2014 but not the value of your entire fund.
  • You can list up to 10 colleges that will receive your FAFSA so search for the colleges to which your student has applied. If your student has applied to more than 10 colleges list the 10 that your student is MOST interested in. Once the FAFSA is processed, you will have an opportunity to add more colleges.

The FAFSA can be submitted before your tax return is filed and in fact since some colleges ask for it early so it will have to be submitted before your return is filed. I do encourage you to file your tax return as soon as you can and also suggest that you file it electronically. Approximately 2 weeks after you file electronically you can go back into the FAFSA and link your return to the IRS and the information from your return will be imported into the FAFSA.

If you choose not to file electronically and link to the IRS, you will have to manually correct the FAFSA to match your return. In addition, if you do not link to the IRS the colleges may ask for additional information to confirm your financial information.

I suggest that you file a FAFSA even if you don’t think you will be eligible for need based aid since some colleges require it even for merit aid, In addition, some colleges will give you a few hundred dollars or more just for submitting the FAFSA.