<p>For CSS schools that evaluate a parents small business financials, Im a little unclear if they add back in total business losses, or just certain expenses/deductions. </p>
<p>As an example, if a parent is a small business owner and has income of $10,000 and expenses/deductions of $20,000, they would report a loss of $10,000 on line 12 of the 1040 (or line 17 for partnerships or S-corps). Would a school add back in the $10,000 loss as income considered in the FA evaluation, or would/could they possibly add back in the as much as $20,000 in expenses/deductions?</p>
<p>On the CSS profile, question PI-120b asks Enter your parents' net income (or loss) from business, farm, rents, royalties, partnerships, estates, trusts, etc. from IRS Form 1040, lines 12, 17, and 18. The college NPCs on the College Board also seem to be just asking for information on business income/loss as well. So, it seems like they are focused on net income losses to add back in, but Ive seen many people on this forum cite expenses and deductions to be added back in. Which is it?</p>
<p>Your tax return will contain more information about the deductions you are taking, as will (IIRC) the business supplement you will have to fill out.</p>
<p>Nobody knows exactly how the schools treat expenses, and which they will or won’t add back in, because the schools won’t say, and every school probably has different formulas anyway.</p>
<p>I would be surprised if they consider any amount of loss, particularly if it is generated by the tax code (e.g., because of depreciation or mileage deductions) rather than actual expenditures. After all it is your choice to have a money-losing business, why should you get FA to subsidize it?</p>
<p>Just speculation on my part though, nobody really knows for sure.</p>
<p>Op, I have found that this forum is not a good place to ask about questions such as this, as many posters have issues with the idea that some people have income-producing ventures above and beyond the usual 9-5 grind. I would suggest asking the school financial aid office directly, to get a better idea.</p>
<p>OP,</p>
<p>While YMMV, profile schools usually add back depreciation, health insurance and retirem</p>
<p>OP,</p>
<p>While YMMV, profile schools usually add back depreciation, health insurance and retirement. Moreover, your depreciable assets are usually treated as cash assets. </p>
<p>I am not sure how loss is treated though, I.e. whether or not it is substracted from your other income or simply zeroed out.</p>
<p>Since each college has their own rules, your best bet is to follow Sylvan’s advice and ask a college directly.</p>