<p>while filling out the fafsa, it is asking for information that isn't complete. the income question is not asking about income from S corps, but that number is included in the AGI, just not in the income. It also is not taking in consideration self-employment tax, as it asks for line 55, which does not include the SE tax. </p>
<p>How do we include this information?</p>
<p>Also, does the bank balance include the business bank account?</p>
<p>Thanks.</p>
<p>OK, just talked to the FAFSA guy. He said that FAFSA is not concerned with the self employment info (income or taxes, aside from the specific line numbers referenced). He also suggested talking to a tax preparer or the school specifically to see how they want to handle the self employment information/numbers. He also said to not include the business bank balance.</p>
<p>You don’t need to talk to the school about the self employment numbers. If you have an S Corporation, it is part of the EFC & that is it - no other reporting is necessary. The only exception is if you have income reported on Schedule K-1 (Form 1065 box 14 code A) - this is considered income from work and is included in that number (unless it is negative, in which case it is treated as 0). Only that schedule/form/box/code, though … no other. Self employment taxes are not reported on FAFSA.</p>
<p>“He also said to not include the business bank balance.”</p>
<p>Not to tag along too much on this thread, but I have a question about this. So is it correct to assume that if someone is self-employed, as long as they have money in a bank account under the business, then this money does not have to be declared as part of one’s personal income? Somehow this doesn’t seem right, but hey, if it works, then great. So is this right?</p>
<p>How is the S corp “part of the EFC”? All income is reported in the AGI, but the FAFSA does not include line 17 when asking about the income in more detail.</p>
<p>I think we may file a K1, so will have to check. H did not give me that form as it was not needed for CSS and possbily because we don’t use it.</p>
<p>We still have to pay self employment taxes that are part of the 1040, so wondering why those are not included in the FAFSA.</p>
<p>Thanks.</p>
<p>That is correct - if it is a business account, it should not have personal money in it. If the business has fewer than 100 employees, the business assets do not have to be reported.</p>
<p>it is part of the EFC</p>
<hr>
<p>Whoops - that is a typo. I meant it is part of the AGI.</p>
<p>Yes, you pay self employment taxes. No, they are not included on FAFSA. It’s just how it is.</p>
<p>In all the S-Corporation tax info I reviewed as an aid officer, I only ever had one that had Schedule K-1 (Form 1065 box 14 code A) - so I am guessing it may not be too common?</p>
<p>^ but personal income is made from business…</p>
<p>I have never been self-employed, so I don’t know what people do in terms of their business accounts. However, I would assume that my personal bank account would have the money available to me for my own, unrestricted use … and my business bank account would have money that is available for the use of the business. In any case, you don’t put the business account on the FAFSA … but CSS will want to know all about it!</p>
<p>Sole proprietors transfer money between business and personal accounts all the time. The IRS doesn’t care, so a small business owner intent on hiding money from FAFSA could quite easily put personal money into the business and probably never get caught. </p>
<p>K1s are the forms used to report income from partnerships.</p>
<p>I have seen plenty of schedule K’s — just one with an amount in that particular place.</p>
<p>SE taxes are not deductable on the FASFA, but FICA taxes aren’t either. Since 1/2 of SE taxes paid are deducted from income on form 1040, it puts people who pay self-employment taxes back on par with those who pay social security taxes.</p>