<p>My dad is a contractor, and not uncommonly, he employs some illegal immigrants. He pays them in cash, so it does not reflect on his tax returns. Now his stated gross income is ~70000, when he actually made about ~25000.</p>
<p>So now my EFC is wayyy higher than I can really afford or should have to. I don't know if I should tell the financial aid office about this ~illegal activity, or is there some other way he can change the situation? We haven't filed the 2012 taxes yet, so is there still hope for me?</p>
<p>You need to have a chat with your parents about the money issue. Talk about taking a gap year so your dad has time to rectify his situation with employees and subcontractors. Talk about how much money your parents can contribute toward your education. Many of us have unaffordable EFCs and no college savings, so you certainly aren’t alone. If your GPA and test scores aren’t good enough to qualify for merit-based aid, get to know your commuting distance community colleges and public universities. With a student loan and a part-time job, you may be able to afford them.</p>
<p>Your tax forms and financial aid statements do have to jive. How else can a system verify large numbers of applications? So, yes, what your father does affects your financial aid. it also affects the taxes he pays and a lot of other things. I won’t even go into the legality and morality of what he is doing, but the fact is that he is paying taxes on the income he is reporting on his tax forms, and that is the income that stands for any financial reporting.</p>
No. Ever hear/read about “you play, you pay”? Relevant here. If your father plays around with federal laws, he will be expected to pay more for your college education. (And there may also be penalties for employing illegals.)</p>
<p>For any program where there are income requirements, any scholarships, anything where proof of income is required, that tax return is generally considered the verification.</p>
<p>Since 2012 taxes are not yet filed, your father can consult with an accountant and tax attorney as to what he should be doing. Yes, there are many people who do pay “under the table”, but you can’t then get credit for doing it, and there may be penalties if you are caught doing this.</p>
<p>The OP’s father has been paying under the table and therefore has NOT been paying any share of taxes or benefits to his employees, this “saving” himself a bit of money. Does his college bound student now feel that her parents should also be able to save on her college costs by looking at the actual costs of doing business? You just can’t have it both ways. The parent has chosen this option of paying his workers because it is less costly to him as an employer.</p>
<p>You think your EFC should be lower, but it is based on your father’s stated income. If he is reporting much higher gross income each year, then he is also paying higher taxes each year. He must have a reason for doing this. Whatever his reason, you have benefitted from it, so you are not entitled to now benefit from a low EFC.</p>
<p>Speak to him about his 2012 tax return. I doubt there’s much he can do to “fix” this situation, because I doubt he has the information from those “employees.” Even if he does, they are going to be upset if he suddenly claims them as employees. Either they will be treated as contractors, and he issues 1099s to them - in which case they will owe self-employment taxes - or he will face penalties, plus owe his share of employment taxes. He will also be alerting authorities to his illegal activities, and may face other consequences as well.</p>