It’s best to file your FAFSA early because colleges may run out of financial aid funds for later applicants. But filing early often means that income tax information must be estimated and then later corrected.
Estimating your income may be a simple matter of using the previous year’s number and adjusting slightly. Or, if your financial circumstances have changed considerably it may require more work. FAFSA has an income estimator on their site that may be helpful.
After income taxes are filed, you must submit corrected information to FAFSA. In most cases, you can use their IRS Data Retrieval Tool for a relatively painless process. Otherwise, the process is more time-consuming because you will need to request that a copy of your tax return be sent to your school.