<p>Hi, my mom opened up a new salon and she lost around $4000. Where the FAFSA asks for how much my mom earned, I put $-4000 (notice the negative sign). I couldn't figure out if this is what they're looking for. On the help page the most I could get out of it was if you "earned negative one million or less" you need to put -999999.... The most I gathered from that was that it is ok to put negative signs into the box. Can someone please help me?</p>
<p>It's strange because after I sent that (this was actually a correction form), my EFC was raised by a thousand and I was expecting it to lower after accounting for my mom's loss of earnings. Thanks a lot if anyone can help me with this.</p>
<p>I’m not a business owner…but if your mom owns a business, wouldn’t her losses be reflected on that PORTION of her tax return…and therefore in the AGI?</p>
<p>I didn’t know the FAFSA allowed for negative income.</p>
<p>I didn’t think negatives were allowed either! Seems like last year people were told to put in 0’s instead of negative amounts.</p>
<p>In the EFC formula negative income numbers are treated as 0.</p>
<p>OP - did you put this in the income from work question (rather than the AGI question)? If you changed the income from work to a 0 or negative number from a positive number then this would cause the EFC to increase. The income from work # is only used to calculate allowances for FICA taxes (SS taxes that are only incurred on income earned from work). The allowances are used to reduce income used in the formula. Reducing the income from work number = smaller allowances = higher income available to be used in the EFC = higher EFC.</p>
<p>Hi everyone, thanks for replying. </p>
<p>swimcatsmom, thanks for explaining that bit about why the EFC was raised after lowering income from work.</p>
<p>Like I said, this is for my mom’s <em>earned</em> income from working in 2009. Under the AGI I have something else listed but under only for my mom’s earnings I put a negative value. Is this incorrect? Should I just put zero? </p>
<p>The adjusted gross income (both mom and dad) for 2009 is thousands HIGHER than the last year despite my parents losing more money in 2009. I noticed on the tax form (1040) on line twelve it is the “business income (or loss).” The number here is just $4000, it is not negative. So yes, when it was factored into the AGI it was all added up and so we have a higher AGI than last year. </p>
<p>On the 5882 form under “overall loss” there is a loss of $4000. I also noticed under “unallowed loss” there was her $4000 as well.</p>
<p>Maybe this is important too, I don’t know, but my mom DID make money from her hairdresser job BUT she lost $4000 in opening up a new salon. Does the fafsa want to know this at all, or will this ignore this fact, and is this why I’m having issues with this?</p>
<p>I really don’t understand the tax forms behind all this but I just figured I’d share this information in case anyone can help me. Thanks so much, I’ve grown really frustrated on how to fix my fafsa…</p>
<p>Well I really don’t think it is possible to have a negative number for the income earned from work. It sounds like your Mom incurred business losses, that is not the same thing at all as having negative income from working. If she was paid (or paid herself) a salary then that s/b her income from work. Did she have any W2s with FICA taxes deducted? The income from those W2s is her income from working (ditto for your Dad). Have them find those numbers and put them down as income from work. Then you will get the allowances for FICA taxes.</p>
<p>The business loss should already be included in the AGI as it should be on schedule C.</p>
<p>My dad has a W2 form that his his fixed income on it, so his income wasn’t an issue. My mom however, works two jobs (one as a hairdresser at one salon and another as a co-owner at another salon). So she has two 1099-MISC forms (2009 Miscellaneous Income). And she has another form with the business loss on it (which we do not have right now and I need to ask for it back). How would I go about putting down her income? Just add up all of what she earned… or is there a certain box I should be looking at that I can put down as her earned income?</p>
<p>Income is generally reported on either a W-2 or a 1099.</p>
<p>Your mom’s “earned income from work” is what’s shown on her W-2, if she has one. In your mom’s case it looks like she’s paid on a 1099 basis, which means her employer doesn’t withhold taxes but just pays her a straight hourly rate. She’s then responsible for paying her own self-employment taxes. So her 1099 income would not be included as “earned income from work”.</p>
<p>If you have her Federal tax form, you’d find her total income on the Adjusted Gross Income line of her 1040. That total income would be the sum of all 1099 income minus any allowable business losses. If she doesn’t have a W-2 then her “earned income from work” would be zero.</p>
<p>Are your parents divorced by any chance?</p>
<p>No, my parents aren’t divorced, so I’m looking at a joint 1040 form. Also, yes, she doesn’t have a W-2. So her earned income from work is zero? Wow, for the past two years I’ve been adding up her 1099 forms… I was never really sure how to separate the earned income from work so I would either 1) take my dad’s W-2 value and subtract this from their AGI and make the rest as my mom’s earned income from work or add up her 1099 values…</p>
<p>I know it’s confusing, but the earned income from work won’t always equal the adjusted gross income, so you don’t need to make it all add up. In fact, if there is any income from investments, self-employed income, or income from an S-corporation, the earned income from work will be less than the AGI. Or, in your case, if there’s a business loss, then the earned income from work (your father’s income) might in fact be much higher than your AGI (parents’ income - business loss).</p>
<p>Just plug in the numbers from your father’s W-2 in question 87 (father’s income earned from work), and zero for question 88 (mother’s income earned from work) and make sure their adjusted gross income (question 84) matches their AGI on their 1040.</p>
<p>Ohhh, okay, I didn’t know that earned income does not have to equal adjusted gross income.</p>
<p>Alright, thank you for the very very specific instructions, I won’t have any problems with that.</p>
<p>Just one more thing. You said “Or, in your case, if there’s a business loss, then the earned income from work (your father’s income) might in fact be much higher than your AGI (parents’ income - business loss).” That’s what I thought would happen too… But the thing is, his income is lower than their AGI. With my mom’s business loss, I still don’t understand where this is coming from?</p>
<p>Your mom’s 1099 income is also part of their total AGI.</p>
<p>The total AGI should be something like:</p>
<p>Dad’s W-2 wages +
Mom’s 1099 income +
Business profit (or subtract a loss) +
Any interest or other investment income</p>
<p>If you have your parents’ 1040 in front of you, you should be able to see exactly what gets added into their AGI. The AGI is the last line on the first page of the 1040.</p>
<p>Okay okay, so basically this is what I have:</p>
<p>AGI is $71,000 (according to 1040)
Father’s income: $66,800 (according to W-2)
Mother’s income: 0</p>
<p>Would this make sense? On the 1040 I see that the “business profit” is $4181 so that was added to my father’s income to create a total of $71,000. And on the 8582 form I see an “overall loss” of $4226.</p>
<p>I’m not really familiar with Form 8582, which is where you calculate passive losses. However, if your parents are pretty sure their AGI on their 1040 is correct, then you should be fine. You don’t need to account for business profits or losses in the Parent Income section of FAFSA.</p>
<p>I doubled checked with my dad to see if the AGI was correct and it wasn’t. He had sent me an old draft of their 2009 tax form! Well, that solves the mystery doesn’t it? However, now I know what to put down for my mom from now own.</p>
<p>And lastly, vballmom, I just wanted to thank you SOOO much for helping me out. I was really stressing out over this. Sometimes I marvel at the fact that nice and helpful people on the internet exist 
Thanks again!</p>
<p>And I marvel at the fact that young people have to wade through the tax forms and FAFSA filings on their own :)</p>
<p>(you’re very welcome, glad I could help)</p>