If the IRS verification fails, you will be prompted by Clarity to upload your 1040 and/or your W2s for manual verification. During the manual verification process, Clarity’s Data Team reviews your tax documents to verify your income and taxes. After the verification process is completed, Clarity sends your application and manually verified information over to the school(s) you’re applying to for their final review.
Here are the documents reviewed during the manual verification process:
What is a 1040?
The 1040 form, also known as the U.S. Individual Income Tax Return, is a two-page document that is the main form used to file your federal taxes every year. You use the 1040 to report your income, deductions, and taxes paid to the IRS. The 1040 form shows your filing status, dependents, your address, and more. This form is commonly found towards the front of your tax return right after your 8879 form. There are also variations of the 1040:
1040-SR: This is the version of the 1040 that is for seniors who are 65 or older and is the larger format version of the 1040. Instead of 2 pages, the 1040-SR is 3 pages due to the larger font used. https://www.irs.gov/pub/irs-pdf/f1040s.pdf
1040-X: This form is used when you need to amend your taxes. https://www.irs.gov/pub/irs-pdf/f1040x.pdf
1040-NR: This form is for U.S. Nonresident Aliens who engaged in a trade or business in the U.S. https://www.irs.gov/pub/irs-pdf/f1040nr.pdf
How Do I know if I have a 1040? If you filed United States taxes for the tax year, you would have a 1040 on your tax return.
IRS1040 Form: https://www.irs.gov/pub/irs-pdf/f1040.pdf
What is a Schedule 1?
The Schedule 1 form reports additional income sources and adjustments to income. The first page of the Schedule 1 form is reserved for additional income including unemployment compensation, business income, alimony received, and more. The second page of the Schedule 1 form is reserved for adjustments to income including educator expenses, health savings account deductions, alimony paid, and more. We only review the first page of the Schedule 1 form during our verification process.
How Do I know if I have a Schedule 1 Form? If you have an amount in Lines 8 or 10 on your 1040, you have a Schedule 1 Form. The amount in Line 10 of the Schedule 1 form is the same as Line 8 on the 1040 form. The amount in Line 26 of the Schedule 1 form is the same as Line 10 on the 1040 form.
IRS Schedule 1 Form: https://www.irs.gov/pub/irs-pdf/f1040s1.pdf
Fun fact: U.S. Olympians use the Schedule 1 form to report their winnings and medals.
What is a Schedule A?
The Schedule A form is used to report itemized deductions. These deductions can include medical expenses, mortgage interest, state and local taxes, charitable contributions, and more. Taxpayers use Schedule A when their itemized deductions exceed the standard deduction. This form helps reduce your taxable income based on eligible expenses you paid during the year.
How Do I know if I have a Schedule A form?
If the amount on Line 12 of the 1040 doesn't match the standard deduction amount for your filing status, you may have a Schedule A form. (You can find the Standard Deduction amounts on the left side of the first page of your 1040 form.)
IRS Schedule A Form: https://www.irs.gov/pub/irs-pdf/f1040sa.pdf
What is a Schedule C?
The Schedule C form reports profit or loss from your business. This form is also used by independent contractors and sole proprietorships. The Schedule C form captures business income and expenses such as advertising, travel, vehicle use, and more. If you are a statutory employee and have “statutory employee” checked in Box 13 of your W2, your W2 income would be reported on Line 1 of a Schedule C form instead of Line 1a of the 1040. It is possible to have multiple Schedule C forms in your tax return. If you do have multiple Schedule C forms, make sure to upload all of them to your Clarity account.
How Do I know if I have a Schedule C form? If your Schedule 1 form has an amount in Line 3, you have at least one Schedule C form in your tax return. The amount on Line 3 of the Schedule 1 form should match the sum of all amounts in Line 31 of all Schedule C forms.
IRS Schedule C Form: https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
What is a Schedule E?
The Schedule E form reports income from rental real estate, partnerships, S corporations, estates, royalties, and more. The Schedule E form captures rents received, various property management expenses, passive income and loss, and more. It is possible to have multiple Schedule E forms in your tax return. In some cases, you may only have the second page of the Schedule E form dependent upon your tax filing situation. If you do have multiple Schedule E forms, make sure to upload all of them to your Clarity account.
How Do I know if I have a Schedule E form? If your Schedule 1 form has an amount in Line 5, you have at least one Schedule E form in your tax return. The amount on Line 5 of the Schedule 1 form should match the sum of all amounts in Line 41 of all Schedule E forms. If there is no amount on Line 41, you would use the amount in Line 26.
IRS Schedule E Form: https://www.irs.gov/pub/irs-pdf/f1040se.pdf
What is a Schedule SE?
The Schedule SE form is used to calculate self-employment tax. This tax covers Social Security and Medicare taxes for individuals who work for themselves. If you earned income from freelance work, gig jobs, or a small business, you may have a Schedule SE form in your tax return. The form calculates the amount of self-employment tax owed and how much of it is deductible.
How Do I know if I have a Schedule SE form?
If you have an amount in Line 15 of your Schedule 1 form, you have a Schedule SE form. The amount in Line 13 of the Schedule SE form flows into Line 15 of the Schedule 1.
IRS Schedule SE Form: https://www.irs.gov/pub/irs-pdf/f1040sse.pdf
What is Form 1116?
Form 1116 is used to claim the Foreign Tax Credit. This credit helps taxpayers avoid double taxation on income earned and taxed in another country. The form reports foreign income, taxes paid to foreign governments, and calculates the allowable credit to reduce your U.S. tax liability.
How Do I know if I have a Form 1116?
If you have an amount higher than $300-$600 on Line 1 of the Schedule 3, dependent upon your filing status, you may have a 1116 form.
IRS Form 1116: https://www.irs.gov/pub/irs-pdf/f1116.pdf
What is Form 8889?
Form 8889 is used to report Health Savings Account (HSA) activity. This includes contributions made to the HSA, distributions taken out, and any excess contributions. The form helps determine the deductible portion of HSA contributions and whether any distributions are taxable.
How Do I know if I have a Form 8889?
Form 8889 from the 1040 if there is an amount listed in Line 8f or Line 13 of Schedule 1.
IRS Form 8889: https://www.irs.gov/pub/irs-pdf/f8889.pdf
What is Form 5498?
Form 5498 reports contributions, rollovers, and fair market value for Individual Retirement Accounts (IRAs), including Traditional, Roth, SEP, and SIMPLE IRAs. It is issued by financial institutions—not the IRS or taxpayer.
How Do I know if I have a Form 5498?
If you or your spouse contributed to or rolled over funds into an IRA (Traditional, Roth, SEP, or SIMPLE), your financial institution may have sent you a Form 5498.
IRS Form 5498: https://www.irs.gov/pub/irs-pdf/f5498.pdf
What is a W2?
A W2 is a tax document given to you by your employer that reports your income for a specific tax year. Not only does your employer send you a copy of your W2, they also send a copy to the IRS. A W2 can only be issued to one person. A W2 is different from a 1099. A 1099 reports income for independent contractors while a W2 reports income for employees on the company’s payroll.
Different tax documents can show your detailed W2 income:
IRS W2 Form: The official version of the W2 form. Companies will use this exact format, or a different format with the same number of boxes. https://www.irs.gov/pub/irs-pdf/fw2.pdf
Corrected W2: If your employer needs to correct amounts on your original W2, they will issue you a corrected W2. If you have received a corrected W2, make sure to upload that to your Clarity account for review. https://www.irs.gov/pub/irs-pdf/fw2c.pdf
IRS Wage and Income Transcript: Lists all of your W-2, 1098, 1099, and 5498 income (https://www.irs.gov/individuals/transcript-types-and-ways-to-order-them)
Wages Statement from Tax Return: Depending on how your taxes were prepared, you may have a statement that lists all of the information from your W2s
State Tax Return: For some states, it is required to report the details of your W2s when filing your state income tax.
United Nations Statement of Taxable Earnings: If you work for the United Nations, you will receive a Statement of Taxable Earnings instead of a regular W2.
Form 4852: Substitute for the W2 form if you lost the form and cannot get another copy from your employer.
How Do I know if I have a W2? If you work for a company and are on their regular payroll, the company would have sent you a W2 by January 31st. If it is a W2, it’ll say either W2 or Wage Statement on the document. In most cases, the W2 will have 20 boxes included. The amount in Box 1 of the W2 is reported on Line 1a of the 1040, or Line 1 of a Schedule C form if the Statutory Employee box is checked in Box 13.
Before uploading your tax documents, make sure that you are uploading the correct tax year. Ensure the tax year at the top right of your tax document(s) matches the tax year listed in the document request email you received from Clarity. We recommend uploading PDF versions of your tax documents. If your PDF has a file size larger than 25 MB, make sure to compress your PDF first, and then upload it to your Clarity account. (https://www.adobe.com/acrobat/online/compress-pdf.html)
Once you are ready to upload your tax documents, go to https://app.clarityapp.com/household/documents and click the Upload Document button on the header of the document request.
After you upload your tax documents, the Data Team will review your documents to make sure we have everything that we need to complete the verification process. You may receive additional requests to upload documents or to provide clarification on any discrepancies found during the review.
For any questions, please contact support@clarityapp.com