New here- What is held against you when applying for Financial AID ?

Paying for College
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<p>Generally, if dealing with a college that only uses the federal methodology (FAFSA), the value of your home is not a part of your assets when it comes to determining your EFC. Under FAFSA, a home means your primary residence. If however, a college uses the institutional methodology (PROFILE, or a supplemental school aid form) and you are asked about the value of your home, then the value of your home will probably be considered in determining your EFC.</p>

<p>The usual way the schools check your information is called verification. Typically, it’s not a particularly invasive process. In my case, they asked for a copy of my wife and my 1040, my son’s 1040, and all W-2’s (wife’s, mine, son’s). The 1040 is for the tax year prior to which you are applying for aid (e.g., for school year 2005/2006, the school wanted 1040 from 2004). I suspect that if you itemized your deductions and you deduct the taxes on these two parcels separately, then the lot without the house may be treated as an asset and used when your EFC is determined. If you have deducted the taxes on these two parcels separately, you might ask your accountant if there’s any problem with lumping the sums together on your tax return.</p>

<p>Even if the lot without a house is considered an asset, there may be a way to get it out of the picture when your EFC is determined. It’s called the simple needs test. Your family’s EFC (expected family contribution) is derived from four factors: parent’s income, student’s income, parent’s assets, student’s assets. Look for the line on any 1040 form: Adjusted Gross Income (AGI). Under the federal methodology, if the parents income (AGI) is beneath $50000 and the parents file a short form (1040A or 1040EZ), then two of the above factors (parents assets and student assets) will be excluded when your EFC is determined. Since your husband’s income is close to the $50000, by contributing to retirement plans and reducing your AGI below $50000 and if you file a short tax form which would mean not deducting property taxes, all family assets would be excluded when your EFC was determined.. Again you should talk to your accountant (and maybe a financial aid planner) to assess the pros/cons of this. Good luck.</p>