<p>Hi there,
I am 26 and married. This is my first time filing FAFSA application. There is a question where I have to provide a sum of all of our money from cash, saving and checking accounts. My husband is self-employed and have his business account that I don't have to include in this amount. The thing is, we had 50000$ on our saving account, but these money were intended only for his business, nothing else. Today we transferred all money form our savings to his business checking account. Now I am really confused if there will be a problem with my FAFSA application. As of today, we have 0$ on savings and some small amount on checking account. I am worried that FAFSA will question me why we transferred all our saving money to husband's business checking. This is my first time dealing with Financial Aid and if we knew that saving account was important we would never open it on the first place. Do you think it is a good idea to still file my FAFSA or is it better to wait for the next year now since our record may show that we have money?</p>
<p>The FAFSA is concerned with the money as of the day you file it. Did you wait to file FAFSA until the $ was moved? If so then that’s OK. I do wonder why your husband’s company funds were in your savings account.</p>
<p>He has an LLC company and he is the only one working in his company. The reason why we moved the money into savings was to get a bonus from the bank for opening savings account.</p>
<p>I still didn’t file my FAFSA and we moved the money today. I was just concerned it to be considerate as a fraud because we got some interest payment from these money, but it was just a little bit over 100$ including 100$ that we got as a bonus.</p>
<p>I agree with Erin’s Dad. It’s really bad business to be mixing personal with business, and if audited, yes, you could be flagged for playing games. Not worth the $100 bonus. </p>
<p>It is the balance as of the day, so it should not be an issue, unless you are picked for verification that would want to see more.</p>
<p>Wait, so anyone can become self-employed, create a single member LLC, dump the excess family cash into the new business checking account, and not count it as an asset for FAFSA purposes?</p>
<p>Yep. They can also lie, cheat and steal. You can take out the money and put it under your bed too. But if you are the lucky one who gets picked for full verification and they want evidence of everything, from tax forms to bank statements for the year, and things don’t look right, then you can be in trouble. The business had better not just be a shell. But you can have $50K in your savings, just regular old money and donate it to a charity, give it to your mother or anyone, take a vacation , all legally and it would not be included as your asset. But if audited and we are talking the feds, here, if they sniff fishy business, you can get into a lot of trouble.</p>
<p>I made that statement because I DON’T see how moving cash into a business account takes it out of the FAFSA equation, but no one disagreed with the OP when she said: </p>
<p>“My husband is self-employed and have his business account that I don’t have to include in this amount”</p>
<p>Wouldn’t a self-employed business owner have to include the $50,000 cash for FAFSA purposes regardless of whether it is in a personal bank account or a business bank account?</p>
<p>Business assets for companies under 100 employees, I believe, are not included on FAFSA.</p>
<p>That is right, you don’t have to include money that you have on business account if you have under 100 employees. What is bothering me is that if financial aid will check my application and find out that we had money on savings account for sometime and moved it before I applied, it might look suspicious to them.</p>
<p>If they audit you, yes, it will look suspicious. It is sloppy as well and you should not have done this. If you are audited, they will ask for a trail so it doesn’t look like you took the money out of your account and stuck it in your business account to avoid reporting it. If the source of the money is very easily traced for business purposes and you can show how you just stuck it in there to get your $100 bonus and put it back, you’ll be fine, other than the pain in the neck you will get in having to get the back up documentations. But if have no proof, and that money kind of filtered in there from all over the place and suddenly right before you file FAFSA you decide to move it over to business, yes, you might have a problem. </p>
<p>I suggest you keep your business and personal account separate. When I worked, I had a lot of self employed clients and a number of them did get into trouble for doing the sort of foolishness you did, and in some cases it was pretty clear that the funds were business funds, but when the IRS or feds of any sort start putting the squeeze on,y it’s often a good idea to settle quickly and some of our clients did end up having to do so. In your case, it 's doubtful you’ll get any trouble for this, but if you continue operating that way, you are truly asking for trouble. It is suspicious. You are not supposed to be mixing personal and business.</p>
<p>That is right, you don’t have to include money that you have on business account if you have under 100 employees.</p>
<p>This should change. I can understand not counting the structure, basic equipment, and maybe the inventory up to a certain $$ amount, but to allow families to park their savings in a company acct is ridiculous. There should be a limit for this as well.</p>
<p>I have to agree with mom2, this should not be allowed. I will say though, I very much doubt what the OP described - moving $50k from personal to business account just prior to doing FAFSA - would pass if audited. Maybe I’m wrong, but I don’t believe that would fly. Yeah, the chagces of an audit are small, but that would then go for ANYTHING you wanted to claim on FAFSA regarding asset ownership. Income can easily be checked with the tax return, assets, not so easy.</p>
<p>Also, I think it depends on how the business is set up and how this $50k cash infusion is handled on the books. I have a “business account” I use to run my sole proprietership business cash funds, but it’s really a personal account with a business name title and I included the value as personal assets on FAFSA even though I use it primarily for business. If the money in the account is INCOME from your business that you’ve taken as either salary or other income, then it’s NOT really still owned by the business.</p>
<p>Whether it should change or not, it’s valid now. There are a long list of things that should change. </p>
<p>However, there are special rules about business accounts not just for FAFSA but for tax and liability purposes. That’s why there are business accounts. To set one up and then jump the money around to your personal accounts can lose you that protection as it can no longer be clear which is which. Not worth it for the $100. Reminds me of my MIL as her dementia was setting in, moving her money around to get a toaster, plaid blankets, and other gifts. Sheesh.</p>
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I agree, especially since the rules are not consistent between “business” and “rental properties” which count everything as assets. Frankly, the whole matter doesn’t make a lot of sense.</p>
<p>^^^</p>
<p>Right. I can’t hold back $XX thousands in some kind of reserve acct for my rentals claiming that the money is intended for the rentals (refurb, damages, paying housekeepers, paying repair people, etc). </p>
<p>I don’t understand this “under 100 employees” bit. A person can have quite a booming business with far less than 100 employees. I can understand maybe less than 5 employees, but 99 or less??</p>
<p>Them’s the rules. On the other hand, getting any large amounts of grant money is not that easy from a FAFSA only school ,and they certainly have the right to ask for more info if they want it before doing so. A school can do what it pleases with its own money. However, for those schools that guarantee to meet need or do meet close to all need, PROFILE is usually needed and this sort of thing is quickly elimnated when that form has to be filed as business deduction and the value of the business as well as business assets are taken into account. </p>
<p>What is usually gained in a situation like the OP’s is that maybe some of the loans can be subsidized. There are a lot of niches like that in the fin aid forms, and a number of unfair situations. I personally know some families who got PELL with NCP’s earning a small fortune. If you plan it out, you can do this sort of thing. On the other hand a single parent’s asset allowance is less than half of a couple’s. Go figure.</p>