<p>What matters for earnings is what is reported as income on the 1040. I imagine OP’s husband earns a certain amount but takes deductions on Schedule C. The bottom line profit or loss from Schedule C is then reported on the 1040 as business income. This is entered in the earnings from work section of the FAFSA, and it is part of the AGI. I doubt the whole $45,000 actually ends up as business profit on Schedule C … it is probably much lower, which is why the EFC is 0.</p>
<p>From OP’s other posts, though, I worry that the family is auto 0 due to saying OP is a displaced homemaker/dislocated worker. It doesn’t sound like she actually fits the criteria. So she would need to meet one of the other non-income criteria. Obviously, she is not eligible to file a 1040A or a 1040 EZ due to business income. That leaves having someone in the family receiving federal means tested benefits at any time within the last 24 months. If that is not the case, auto 0 will not work.</p>
<p>I often have to take families out of auto 0 due to incorrectly answering the tax form question. However, many remain 0 EFC just the same. OP, run your numbers through an EFC calculator, but do not answer yes to the displaced homemaker/dislocated worker question. See what you come up with.</p>
<p>A word to the wise: many schools have a priority filing deadline for receiving the best need based aid. This year, we have had to deny grants to students who filed past the priority deadline. We just don’t have enough money, because we have so many needy students. So make sure you apply early to get the best possible aid package you might be eligible to receive. Pell is always there for you … other grants may not be.</p>