<p>We've come up against a really disconcerting situation. My husband and I are in our 60s, I'm retired with a modest pension, he's a self-employed musician whose business makes only a small profit in the best of times. We have some inherited money that is our retirement nest egg, but were not able to put that much into IRAs before we became unable to make large IRA contributions because we don't have much earned income any more. My son will be a freshman in the fall. Our FAFSA number was much higher than we were expecting. Our adjusted gross income is well below the limit, but because of the self-employment we are not eligible to file a short tax form, and therefore all our assets are counted. A friend who has a lot more in assets than we do, but whose husband was laid off last year, clicked "dislocated worker" and did not have to enter their assets and received a very low FAFSA number. I called FAFSA and asked them whether a self-employed person who has a zero profit, or even a loss (which we may have this year) would be considered "dislocated," and the answer was that as long as the business still exists, you are not considered dislocated. So, if you are struggling and still trying to make a go of it, and want to keep working, but are losing money, you are not considered to be as bad off as if you were laid off and collecting unemployment. This seems quite unfair. I know the "dislocated worker" question is new, and it undoubtedly helps folks who really need the help. I just wonder why being self-employed should put us at such a disadvantage. Has anyone else come across this problem?</p>
<p>I haven't run into your specific problem but I did find that some private schools reserve the right to add in self-employed deductions. I have wondered (but don't know) if incorporating would make a difference. In your case, your husband would then be an employee of the corporation.</p>
<p>Geeps, no, some things trigger an automatic efc of 0. The parents generally have to file a short form for it and Schedule C people (independent contractors) can't. I didn't realize that being a dislocated worker also triggers it.</p>
<p>Your husband can contribute up to 25% of his income to a SEP-IRA as a self-employed musician. If you'd done that in the past, you could have sheltered quite a bit of your savings from the FAFSA calculation, and also enjoyed tax-free earnings. It's not too late - he can still contribute going forward (even for 2008) which will reduce your EFC. Remember that assets only add 5.6% to your EFC. If you have $100,000 in cash, the effect on your EFC will be $5600. You can do the math on your assets to see if it's worth considering a SEP-IRA.</p>
<p>I'm a freelance court reporter. I get a 1099, but have many deductions. Therefore, my net is considerably less than my gross.</p>
<p>My son is a junior, spring, so wondering what I will need to report as my income, net or gross.</p>
<p>I've never been able to save for retirement. Taxes and bills have prevented that. Now that college is coming up, wondering if I should start putting away for retirement, no matter how small, because any amount earned will be counted toward my EFC.</p>
<p>My husband is employed full-time, with a decent income, with health benefits. Do we just report his income, or do I have to report mine as well, since I do pay taxes?</p>
<p>Was wondering if I should do a mock FAFSA once I've got my taxes done, and if there's a way I could find out what my EFC would be once the real deal is done. Any thoughts on that?</p>