Extracted from http://www.finaid.org/educators/fraud.phtml
The most common types of fraud will involve underreporting of income and assets and overstating the number of family members in college. Some families may even go so far as to provide a falsified copy of their income tax returns.
Look for the following warning signs:
- Interest and Dividend Income both zero, or very low when compared with the family's wages. Compare these figures with any figures reported for capital gains or losses.
- No alimony income reported or alimony payments reported when the custodial parent is female.
- No business or farm income reported when the parents' occupation suggests that they are self-employed. If the return reports one-half of self-employment tax or self-employed health insurance deduction but no business or farm income, be suspicious.
- Check the return for the telltale signs that it is a photocopy of a photocopy. If it appears to be a photocopy of an original, be suspicious.
- Round numbers like $0, $500 and $1,000 for income.
