<p>I operate a small service business (pet sitting and dog walking) as a sole proprietor DBA. After expenses, gas mileage, etc. my net profit from a business (schedule C-EZ) comes out to X. I don't take a salary, I just take the profit from the business. When we do our taxes we fill out that amount on line 12 of the 1040 (Business income or loss ) and only put my husband's income on line 7 of the 1040.</p>
<p>When I was just playing with the Net Price Cal on the collegeboard website, they ask for the income of parent 1 and then the income of parent 2 and a couple of lines down ask for business income. Both places reference line 12 of the 1040 form if you click on the help button. </p>
<p>I played with the numbers for 1 school and if I list X as income of parent 2 as opposed to listing it under "business income", our estimated remaining cost is 3K less. Obviously we'd prefer to do it that way but is that right? Don't want to get in trouble!</p>
<p>The profit on the C-EZ is considered income for tax purposes, and if you are spending it on personal things (living expenses) rather than investing it back into the business, it would definitely be considered income.</p>
<p>I am a pastor, and my honoraria for weddings, funerals, etc. is reported on schedule C-EZ. It is subject to income tax and must be reported on the FAFSA.</p>
<p>I know, I just don’t know where it is reported on the FAFSA.</p>
<p>The net price calculator on the collegeboard.org website had 2 lines; 1 for income and 1 for business income. My question is, which line do I fill in?</p>
<p>If the FAFSA also has 2 lines (1 for income and 1 for business income) which do I fill out? </p>
<p>So, are you saying that if I am not putting my “net profit from a business” back into the business that it should be reported as income on my 1040 form on line 7 rather than line 12?</p>
<p>Ok, found a copy of last years FAFSA (when does this year’s come out?) and it only asks for how much each parent earned so that is easy to fill out.</p>
<p>Don’t confuse FAFSA with your tax forms. Any income from a schedule C goes on line 12, whether put back into the business or not. If you put it back into the business, it will either already show as an expense on this year’s taxes, or on a following year when it is spent.</p>
<p>Do you know if the school you were looking at uses just the FAFSA, or if they use additional financial information? If they use CSS profile, they may indeed treat business income differently than wages. Remember that NPC is just an estimate, and doesn’t go into the same detail as the FAFSA and CSS, not does it factor in any other information you may give to the school.</p>
<p>If you think about it, this makes sense. You have more control over your business income than you husband does over his wages. You have the option, for instance, of putting that money back into the business before the end of the year, to allow yourself a very small profit or even a slight loss. Of course, that simply shifts the expenses to an earlier year, but presumably you could do that each year until you’re done paying for college.</p>
<p>When I was doing the Net Price Calc it was for UConn and they only use the FAFSA, I believe.</p>
<p>Since my business is a service I do not have a lot of expenses (My main one is mileage since I drive to my client’s houses to walk their dogs and and/or care for their pets). That is kind of what my husband said “since it is a business maybe they assume you are hiding income as an expense and that’s why the EFC comes out higher if it is listed as business income.”</p>