<p>I have a large sum of money in stocks, but am planning on taking out all the stock to purchase a car and pay for a wedding soon. By what time do I need to do this for it not to be applied against me on my fafsa? December 31st?</p>
<p>As an asset it is the date you file FAFSA that matters. But remember that it is an asset whether it is stock or money in the bank. If the wedding/car is paid for before you file FAFSA then it will not be an asset. If the money is has not been spent by the day you file FAFSA, whether in the bank or in the stock account, it is an asset.</p>
<p>For income any profit from the sale of the stock will be counted as income in the tax year the profit is realized. So if you sell the stock in 2009 any profit will be reported as income on 2009 taxes which will be reported on the 2009-2010 FAFSA as income. A higher % of income goes to the EFC than of assets.</p>
<p>If your income is low enough to qualify for the simplified needs test (<$50k) where assets are ignored or for the automatic 0 EFC (<$30k) then selling stocks would probably make you ineligible as you would have to file a 1040 tax return.</p>