<p>My family owns a buisnees that grosses 65,000 and profits 8,000.
Would the income be the gross or profit.</p>
<p>For FAFSA, I believe it is the total income reported from schedule C as taxable income. </p>
<p>For Profile schools, they will take a copy of your schedule C and may add back in some or all of the difference between gross and net. What kinds of expenses does the business have?</p>
<p>As has been asked on another thread, how is your family supporting itself? If that is your family’s only income, someone else must be paying expenses on your parents’ behalf. Any money paid on their/your behalf must be reported on the FAFSA.</p>
<p>Well, we’ve pretty much using our savings too pay for expenses.
The buisness we bought came with a house for it, so we don’t have a morgage or bills seperate for the house.</p>
<p>So, I really didn’t understand what you said, so I came up with conclusion with what you said.
If our taxable income would be the 8,000, that would should be the reported income, right?</p>
<p>Correct, they don’t tax you as if you got $65000 in your pocket when in reality, you’re left with 8000.</p>
<p>If you live rent-free, I believe the fair market value of renting that type of house is considered untaxed income for FAFSA purposes. Perhaps one of the local FAFSA experts can comment on this more authoritatively.</p>
<p>We don’t live rent-free; our home bills are included with the buisness.</p>
<p>I don’t know your exact situation, but my point is I don’t think you can count the housing expenses the business pays for your family to live in the business-owned house, as a business expense for FAFSA purposes. </p>
<p>Think about it this way – your parents could be taking income out of the business then paying the home bills themselves. Then the business would be more profitable. This is the “normal” way things are done – people have income from a business or a job that they use to pay for housing. If the business pays for your housing instead of producing a net income for your family, then the amount paid toward your family’s housing is part of benefit your family gets out of the business, in addition to any cash profit. Even if they can legally get away with deducting that as a business expense for tax purposes, for FAFSA purposes that would almost certainly be “untaxed income”. </p>
<p>If there’s a special circumstance that requires your family to live on-site to run the business, that might change the situation.</p>
<p>You probably need to talk to a FAFSA expert, or to the financial aid office at a school you are attending/applying to. But I can almost guarantee you that if you just fill in a family income of $8K without enough assets that it’s obvious you can live off assets, that will get flagged for further attention because it’s obvious that someone (in this case your business) is paying for living costs for you that haven’t been declared.</p>
<p>We don’t live rent-free; our home bills are included with the buisness.</p>
<p>that will likely be a problem. All of your home bills are NOT business related. The food that you eat on a daily basis, the water you use to bathe and drink/cook, the utilities that are used to heat/cool/light your bedrooms and non-business spaces are not “business expenses.”</p>
<p>the cars, gas, etc that are used for non-business reasons are not “business expenses”…same for phone, etc. </p>
<p>You’re essentially deducting all the expenses that a family lives on as “business expenses,” and then claiming that the $8k that you have left as “income”.</p>
<p>Agreed with the above posters. It is very likely that some of the deductions you put on your schedule C will be added back in as income…because you are essentially using that income to pay for your regular living expenses that are NOT part of the business. This has been a frequent reported issue for small business owners. It’s one thing to deduct actual business expenses… But when you start mixing living expenses into this, it does raise a red flag.</p>
<p>From what you’ve posted, I’d assess your actual income as:</p>
<p>(1) your $8,000 profit
(2) all annual mortgage payments paid by the business
(3) all real estate taxes and homeowner’s insurance paid by the business
(4) all utilities paid by the business
(5) all family transportation expenses paid by the business</p>
<p>And that’s probably just a start . . .</p>
<p>In the end, it doesn’t matter if it’s your great-aunt Nellie who’s paying all your expenses or the family business that’s making the payments. Either way, it’s untaxed income that should be included in all financial aid calculations.</p>
<p>Oh, your right our home bills are seperate.</p>
<p>Then you’re likely have more than a $8k income…otherwise how are you paying for home, utilities, cars, gas, food, insurance, clothing, etc???</p>
<p>Wow, this forum is dangerous. Lots of misinformation in this thread, and many others. </p>
<p>To better answer this question, please answer the following:</p>
<p>1) What is your business classification? (i.e. – sole proprietorship, partnership, subchapter S corp, or subchapter C corp).</p>
<p>2) What % of the business is family owned and controlled? </p>
<p>3) How many full time equivalent employees do you have?</p>
<p>4) Is your business involved in farming, and, if so, is it a “working farm” or an investment farm?</p>
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<p>Well, for goodness sakes, don’t keep it a secret! If you see something that you believe is mistaken, point it out.</p>