FAFSA Tips and Post-Harvey Aid

It’s time to be thinking about Federal Student Aid. If you need help filling out the FAFSA form, please read on or give me call. Also below, I unpack a few of the tax implications of a House bill designed to provide hurricane and wildfire relief.

Let’s begin.

Helpful Tips on the FAFSA

Do you have children in college? Then the Free Application for Federal Student Aid is the form that you will complete if you want to enter the federal financial aid system. Go to www.fafsa.ed.gov to electronically file if you want a Stafford Loan, a work-study job for your student on campus, a federal grant, or maybe even a little scholarship money from the endowment. You will need your 2016 Form 1040 and a list of your assets. If you need help, please give me a call at (713) 785-8939.

U.S. House Approves $36.5 Billion Aid Package

Last Thursday, October 12th, the House approved a bill that will provide Hurricane Harvey, Irma, and Maria relief as well as wildfire relief, and will bail out the financially troubled National Flood Insurance Program. The bill now awaits consideration by the Senate.

The bill also includes a few tax changes that might benefit you. This legislation allows you to take a casualty loss from these storms without having to itemize. You will also be able to deduct your uninsured personal losses in excess of a $500 threshold without regard to the 10% of adjusted gross income offset that generally applies to get that deduction. I don’t need to tell you how big that could be.

Also of note, the 10% penalty on pre-age-59 ½ withdrawals from retirement accounts is waived, as long as the IRA or retirement plan withdrawals are not greater than $100,000. The regular income tax due on these distributions can be paid over three years. You can also borrow more from your 401(k), up to $100,000, and loan repayments can be deferred. These are some of the changes that may affect you.

Tax Records Lost During Harvey?

If you lost your tax records during the hurricane you can use the Get Transcript tool on IRS.gov to print a summary of your W-2, 1099, and 1098 information. A tax transcript is a summary of key information and not a copy of your return. If you want a copy of an actual return, you must file Form 4506. If you want a copy of your transcript by mail, then you must file Form 4506-T. To expedite the processing and waive the customary fees, write “Hurricane Harvey” on the top of the form.

9 Tips for Reconstructing Records after Hurricane Harvey

Taxpayers who are victims of a disaster might need to reconstruct records to prove their loss. Doing this may be essential for tax purposes, getting federal assistance, or an insurance reimbursement.

Here are nine things individual taxpayers can do to help reconstruct their records after a disaster:

  1. Taxpayers can get free tax return transcripts by using the Get Transcript tool on IRS.gov, or use their smartphone with the IRS2Go mobile phone app. They can also call (800) 908-9946 to order it by phone.
  2. To establish the extent of the damage, taxpayers should take photographs or videos as soon after the disaster as possible.
  3. If a taxpayer doesn’t have photographs or videos of their property, a simple method to help them remember what items they lost is to sketch pictures of each room that was impacted.
  4. If you lost your car, there are several resources that can help you determine the FMV before the loss. These resources are all available online or at the library: Kelley’s Blue Book, National Automobile Dealers Association, or Edmunds.
  5. Taxpayers can contact the title company, escrow company, or bank that handled the purchase of their home to get copies of their destroyed documents.
  6. If you bought furniture or appliances with your credit card, then you should contact your credit card company or bank for past statements.
  7. Homeowners should review their insurance policy as the policy usually lists the value of the building to establish a base amount for replacement and starting point for determining FMV before the loss.
  8. Absent that, you can go to the HCAD website for a record of the value of your property, both land and improvement.
  9. You can also support your loss with cancelled checks, credit card receipts, photographs on your phone, and videos.

I hope this helps!

Robert T. Stevenson, CPA