Why is FAFSA 2025-26 asking for tax info if IRS pulling data automatically?

theyre prolly just asking u to verify some stuff. my sister did hers last week and she said the irs part worked for her parents W-2 income but they still had to answer questions about some other stuff. but idk about self employment

There's a bit of confusion about the IRS data transfer for the 2025-26 FAFSA. While the system does pull some basic information (like AGI, filing status, etc.) directly from the IRS, it doesn't capture everything - especially for more complex situations like self-employment. The Direct Data Exchange with the IRS was designed to simplify the process, but applicants with business income, rental properties, or multiple income sources still need to provide additional details. For your father's self-employment situation with multiple Schedule C forms, you'll likely need to reference those documents to answer specific questions about business income and expenses that aren't automatically transferred. It's definitely not as "automatic" as many were led to believe, unfortunately.

I HAD THE EXACT SAME PROBLEM!!!! The gov't LIED to us about how "simple" the new FAFSA would be. I spent HOURS trying to figure out which numbers from my tax return matched what they were asking for. The form asked me for business income details that I thought would be pulled automatically. The whole "direct data exchange" is just a marketing gimmick IMO.

This is a really good question that a lot of people seem confused about. The IRS data transfer only pulls certain elements from your taxes. Here's what it DOES automatically transfer: - Adjusted Gross Income (AGI) - Filing status (single, married filing jointly, etc) - Basic W-2 income information - Some tax credits and deductions But it DOESN'T automatically transfer: - Detailed Schedule C information (self-employment) - Schedule E income (rental properties) - Complex business structures (partnerships, S-corps) - Certain types of investment income So for your dad's situation with multiple Schedule C forms, you'll still need to have those documents handy to complete those sections accurately.

When I tried doing this last month, it was SO frustrating. The IRS data transfer kept failing on me (error message every time) and I had to manually enter everything anyway. Called FSA and was on hold for 2+ hours before giving up. Tried again the next day and same issue. Has anyone actually gotten through to a human at FSA lately???

update: just texted my sister and she said her boyfriend's dad is self-employed too and he had to answer extra questions that weren't pulled from his taxes automatically. so i think thats normal

To clarify why this happens: The IRS Data Retrieval Tool (DRT) was designed primarily for W-2 employees with straightforward tax situations. The technical capability to interpret and extract data from every schedule and form attachment simply isn't there yet. For Schedule C filers specifically, the system can see the final numbers that flow to your 1040, but not the detailed breakdown of business expenses, depreciation, etc. When determining your Student Aid Index (SAI), the FAFSA needs to understand certain business expenses differently than the IRS does for tax purposes. My recommendation: Create a simple spreadsheet with the specific Schedule C line items you need before starting your FAFSA. This will make the process much smoother and prevent you from having to search through tax documents while the FAFSA session is active (which can lead to timeouts).

Don't even get me STARTED on how they handle rental property income on the new FAFSA!! They pull the number from the IRS but then ask you to break it down differently than how it appears on Schedule E. Make it make sense!!! 🤬

After seeing everyone's comments, it seems clear that while the Direct Data Exchange with the IRS is helpful, it's not the complete solution many were hoping for. Self-employed individuals and those with complex tax situations should definitely prepare by having their full tax returns available, particularly the schedules relevant to their situation (Schedule C, E, F, etc.). For the 2025-26 FAFSA specifically, focus on having these documents ready: 1. Complete tax returns including all schedules 2. W-2s (if applicable in addition to self-employment) 3. 1099 forms 4. Business profit/loss statements The system is improved from previous years, but still has significant limitations, especially for non-standard income situations.

Yes, consulting with a financial aid advisor at your college would be extremely helpful in your situation. They can provide guidance specific to how your father's self-employment income will be evaluated in their aid calculations. Many schools have different approaches to evaluating business income and expenses when determining institutional aid (as opposed to federal aid), so getting their perspective could be valuable. Bring copies of the tax documents to your meeting so they can give you the most accurate advice. They may also help you understand if you qualify for any special circumstances adjustments based on your father's business situation.

I'm dealing with a similar situation - my mom is a freelance graphic designer with income from multiple clients (all 1099s) plus some rental income from our basement apartment. Even though the IRS data transfer worked for pulling our basic info, I still had to manually enter all the business income details and break down the rental income differently than how it appears on our tax return. One thing that helped me was calling my college's financial aid office first to ask what specific information they'd need. They actually sent me a checklist of documents to have ready before starting the FAFSA, which made the whole process much smoother. Some schools are really good about helping students navigate these complex situations!

I'm going through the exact same thing right now! My parents own a small restaurant and I was really hoping the new FAFSA would make everything easier, but we're still having to dig through all their business records. The IRS data transfer pulled their basic income info, but then it asks for all these detailed questions about business expenses, equipment depreciation, and inventory that aren't automatically filled in. What's really frustrating is that some of the questions seem to want the information formatted differently than how it appears on their Schedule C. Like they'll ask for "business income before expenses" but that's not exactly how it's labeled on the tax forms. I've been going back and forth between the FAFSA and their tax documents trying to figure out which numbers go where. Has anyone found any good resources that explain exactly which tax form lines correspond to which FAFSA questions for self-employed folks? The official FAFSA help seems pretty basic and doesn't really address these complex business situations.

I'm in a similar boat with my family's situation! My dad is a contractor and my mom has a small online business, so we have multiple Schedule C forms too. What I learned from going through this process last month is that you definitely need to have all your tax documents ready, even with the "automatic" IRS transfer. The system did pull some basic info like our AGI and filing status, but then it asked tons of detailed questions about business income, expenses, and assets that we had to look up manually. It was honestly more confusing than helpful because I kept expecting things to be pre-filled that weren't. One tip that saved me time: before starting the FAFSA, I made copies of all the relevant pages from our tax return and highlighted the numbers I thought we'd need. Having everything laid out in front of me made it much easier to find the right information when the FAFSA asked for it. The whole "simplified" process is definitely oversold, but at least now you know what to expect!

Just wanted to jump in as someone who recently went through this exact situation! My family has a landscaping business and I was equally confused about why the FAFSA was still asking for so much tax information despite the supposed "automatic" IRS data pull. What I discovered is that the Direct Data Exchange is really only helpful for families with straightforward W-2 income. For business owners like your dad, you'll still need to manually input a lot of information because the system can't interpret the complex details from Schedule C forms - things like business expenses, depreciation, and how those numbers should be treated for financial aid purposes versus tax purposes. I'd recommend having all your dad's Schedule C forms, any 1099s, and business financial statements ready before starting. Also, don't feel bad about taking breaks during the application if you need to look up specific numbers - just make sure to save your progress frequently so you don't lose your work if the session times out. The "simplified" FAFSA is definitely more of a marketing term than reality for families with business income, but once you know what to expect, it's manageable!

I'm running into the same frustrating situation! My parents have a small accounting practice and even though the IRS data transfer worked for their basic income info, I still had to manually enter tons of details about their business expenses, office equipment depreciation, and professional fees. What really threw me off was that some of the FAFSA questions seemed to want the same information but phrased differently than how it appears on their Schedule C. I ended up having to call their CPA to make sure I was interpreting the questions correctly and using the right numbers from their tax return. The whole "automatic" data transfer feels like false advertising when you have any kind of business income. I spent way more time on this application than I expected, and I thought the new FAFSA was supposed to make things easier! At least now I know for next year to have all the business tax documents organized ahead of time.

I'm dealing with this exact same frustration right now! My family runs a small consulting business and I was really looking forward to the "simplified" FAFSA process, but it turns out that only applies if you have straightforward W-2 income. The IRS data transfer did pull our basic information like AGI and filing status, but then the application started asking all these detailed questions about business income, expenses, and depreciation that weren't automatically filled in. I ended up having to dig through our Schedule C forms just like in previous years. What's particularly annoying is that some of the business-related questions on the FAFSA are worded differently than how the information appears on our tax forms, so I kept second-guessing whether I was entering the right numbers. I had to stop multiple times to double-check our tax documents and make sure I understood what they were actually asking for. The whole "automatic" data transfer is really only helpful for families with simple tax situations. For anyone with self-employment income, rental properties, or other business activities, you're still going to need all your tax documents ready and should plan to spend just as much time as you did with the old FAFSA format.