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<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>Each year, I prepare
a chart to help financial aid administrators determine if a person who filed a
1040 was actually eligible to file a 1040A or 1040EZ. The purpose of the
chart is to help you and your applicants accurately answer Questions 34 and 72
on the FAFSA. </FONT></SPAN><SPAN class=501423622-17032006><FONT face=Arial
size=2></FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>I've prepared the
chart for use with 2005 tax returns and it is available on the Oklahoma
Association (OASFAA) website at </FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2><A
href="http://www.finaidapps.ou.edu/OASFAA/forms_bank.cfm">http://www.finaidapps.ou.edu/OASFAA/forms_bank.cfm</A>
</FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>A couple of
reminders:</FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>a) THIS
CHART DOES NOT DETERMINE WHO IS ELIGIBLE FOR THE SIMPLIFIED NEEDS TEST. It
simply helps you determine ONE eligibility factor, whether the person was
eligible to file a 1040A or EZ.</FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>b) The AGI
limit for filing a 1040A or EZ went up to $100,000 last year. That
did NOT change the ED requirement that the AGI be no more than $50,000
to qualify for the Simplified Needs Test.</FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial
size=2> </FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>A few new things for
the 2005 chart:</FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>a) Line 13
Capital Gain or Loss---I noted that if the taxpayer indicated he was
not required to file Schedule D, you can ignore the income on this line
when determining if he was eligible to file a 1040A/EZ. This is to be
consistent with the FAFSA instructions for questions
34/72. </FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>b) Line
45 Alternative Minimum Tax---those subject to paying AMT cannot
do that on a 1040A/EZ and are therefore required to file a
1040.</FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>c) Line 10 The
state of Oklahoma issued a one time tax rebate in 2005 of $90 for couples
and $45 for singles. The Einsteins in our state legislature
failed to check with the IRS and didn't realize it would be taxable on the
federal returns. There was a lot of confusion and many Okies filed
1040s for the sole reason of reporting this $90 or $45 rebate on line
10. On 3/3/06, the IRS ruled that Oklahoma taxpayers could include this
report on line 3 of the 1040EZ or line 13 of the 1040A. Because this $90
or $45 COULD have been reported on a 1040A/EZ, if the taxpayer is from Oklahoma
and the amount in line 10 on the 1040 is $90 or $45, treat it as if it were zero
for the purposes of determining whether someone is eligible to file a
1040A/EZ. If you want something more official to back this up, see the IRS
press release on the Oklahoma Tax Commission website at <A
href="http://www.tax.ok.gov/upmin030306.html">http://www.tax.ok.gov/upmin030306.html</A>.
</FONT></SPAN></DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial
size=2></FONT></SPAN> </DIV>
<DIV><SPAN class=501423622-17032006><FONT face=Arial size=2>d) The Deficit
Reduction Act/Higher Education Reconciliation Act of 2006 made a change to the
Simplified Needs Test criteria. This change expands eligibility for the
Simplified Needs Test to students and parents who received benefits from a
"means-tested Federal benefit program" (examples include programs such as SSI,
Food Stamps, School Lunch, TANF, special nutrition program for women,
infants and children, or other programs identified by the Secretary).
I can't tell if this requirement takes effect for the 2006-07 application
year or not (or how we're supposed to know about those benefits). Pay
attention to information from ED and NASFAA about the effective date of this
provision. </FONT></SPAN></DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV><FONT face=Arial size=2></FONT> </DIV>
<DIV align=left><FONT face=Arial size=2>
<P align=left><FONT face=Arial size=2>Pam McConahay</FONT> <BR><FONT face=Arial
size=2>Assoc. Dir., Compliance, Training & Lender Relations</FONT> <BR><FONT
face=Arial size=2>University of Oklahoma Financial Aid Services</FONT> <BR><FONT
face=Arial size=2>1000 Asp Avenue, Room 216 </FONT><FONT face=Arial
size=2>Norman OK 73019-4078</FONT><BR><FONT face=Arial size=2>(405)
325-4617 Fax (405) 325-7608</FONT> <BR><FONT face=Arial
size=2>pmcconahay@ou.edu </FONT></P>
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