<p>I see a lot of knowledgeable people here who say that when colleges determine your EFC, it can be tough for small business owners. Can someone explain that a little more - do they count the value of the business's assets as part of the family's assets for determining EFC?</p>
<p>My specific example is that I do some freelance work as a graphic designer. I probably gross $6,000 per year from this, and receive 1099s from my clients. On my taxes, I report that I have an independent graphic design business, and deduct business expenses (supplies for home office, cost of new design software programs, etc.). </p>
<p>My concern is that colleges might see this free-lance work as a business I own, and somehow ascribe greater value to it than the $6000 I make from it each year. Could that happen, or would they just count the $6000 as part of my total annual household income?</p>
<p>Thanks for any insight.</p>
<p>Based on your explanation (since you don’t seem to have tangible assets) I think the biggest risk is the school adding your deductions back in under income. </p>
<p>Thank you. That wouldn’t be a big deal. I was thinking that if they did somehow see this “business” as a source of significant assets, I would simply lump the $6,000 in with my income and not file a Schedule C this year (my son is a junior, so I am looking at my family’s 2014 tax return as the one that his initial financial aid need will be based on).</p>
<p>Lump it in with your income?</p>
<p>You can still file the schedule C to reduce your tax burden. The school may just add that income back for your EFC calculation. And I understand it is school dependent as to which specific deductions are added back. If your child attends the school for four years this will happen each year. You can use the income without deductions in the Net Price Calculator on the school’s web site to potentially get a more accurate estimate of aid.</p>