I really want to trade stocks, where I have to use my SSN. This means FAFSA will know about any income/loss of income I make. However, I’m only looking into investing/trading a couple hundred dollars. Would this significantly affect the money FAFSA gives me for school and force me to fill out extra paperwork or is it such a small difference that it doesn’t do anything?
Income is income, whether it is small or large, and whether you use your SSN to earn it. You are required to report all income.
It may change the type of tax return you need to file (1040EZ may not be available).
No, it means that the IRS will likely know about income that you may receive. Need-based financial aid programs will only know about it if you report it on FAFSA (or other FA forms), which you will be obligated to do.
There’s an inverse relationship between income/assets and the amount of need-based that may be awarded. If your income goes up a little bit, any need-based aid available will probably go down a little bit. If your income goes up a lot, any need-based aid available will probably go down a lot.
It is illegal to hide any income or assets. Including cash hidden away or stock. You sign a statement on the FAFSA that you are being truthful. By committing fraud you put all of your financial aid at risk.
Any profits/ capital gains are income - which is reportable.
And the value of any stocks that you are holding at the time you submit your FAFSA would be considered a reportable asset as well. (Above, @jym626 is referring to realized capital gains as part of your reportable income; any unrealized capital gains would just affect the value of your assets…)
Correct - the base value of the stock is an asset. Was assuming the asset was shifted from cash/savings or some other source of funds the OP already has as an asset, in contrast to profits/gains which would then be income.