I know some basic elements of the answer, like meal expenses, rent you charge your corporation for the home office, or vehicle expenses.
But can forum users who experienced the process first-hand create (or link) a more comprehensive list?
Does it differ significantly between schools?
We are organized as S-Corp., provide professional services, and our only income consists of the salaries we pay ourselves and the profit from the business.
I think it varies a lot by school. The best bet if you have a few schools in mind is to call the FA office and ask. Just mention you’re filling out the NPC and hoping to get accurate numbers. Sometimes they’ll be really helpful, other times not.
With a services-oriented S Corp they probably won’t add much back that’s on the 1120s. Although the home office and relevant expenses might complicate things a bit; possible some of those expenses get added back. If distributions exceed business income in a given year they might add in that difference. Some might vary in how they treat health insurance, which is potentially a big ticket item if added back. The 199a/QBI deduction probably gets extra attention at some schools so if profit is a large portion of your income that’s worth asking about. I’ve read on cc about meals, vehicle expenses, phone, etc. being added back but that hasn’t been our experience.
I suppose they might add back employer pension contributions noted on the 1120s but I haven’t heard of a school that does (so it’s generally a good idea to max out employer contributions on the 1120s to the extent possible).
I don’t think the sort of list you’re looking for exists, although it’d be great if it did. For one thing, FA offices don’t always say which business expenses they treat as income. They just give you a bottom line.
This varies wildly by college.
Thank you, politeperson, for your detailed comments.
@thumper1: if this varies wildly, are there any regularities in the varied landscape, let’s say related to the size of the institution, geography, private vs. public?
Thank you
I don’t think this relates to the size or demographic of the college.
Things that are typically added back in as income are expenses you would be paying anyway…so things like your cell phone, home office expenses, entertainment, eating out, sometimes travel, car expenses, clothing.
So for example…if you have an office in your home…you would be paying property taxes, utilities, maintenance, etc anyway…because the room is hooked to your house. These expenses are allowable for income tax purposes but MIGHT not be allowed as deductions for financial aid purposes.
Most colleges add in the contributions to pretax retirement accounts, but this might depend on how your business is structured…
I do think a conversation with the colleges is the best way to get a bit of a handle on this for you.