Really Skewed 2008 1040

<p>I am so confused about what to do. This year's income does not reflect our past or future family financial realities. Here's the scenerio: I (mom) graduated from nursing school last December after being home for 16 years and started fulltime work this past February. My husband has been self-employed for 11 years as a contract software developer. Those contracts have all but disappeared during the course of this year. As it would happen, 2008 has been our biggest earnings year ever, because I am now working and DH's work lasted until late in the year. It looks like we will have GROSSED something like 114K. (Previous years were more like 84K.) Next year looks to be WAY different. My income is fairly easy to guage, about 50K, but DH's is a big questionmark. He currently only has a 10 hour a week contract for $500/wk. This contract is also very shaky and may last only another month, or it may go longer. He has feelers out for other contracts, but it's all a crapshoot at this point. </p>

<p>Soooo, we very well may go from $114K this year to something between $60K and $75K next year. The only certain income is mine. So how doe this work for FAFSA, CSS Profile, and financial aid? DD will be choosing her school based on fit and affordability. I don't want her to miss out on a school she would really want because of bad timing of this year's income. </p>

<p>If I were to talk to individual schools fin aid offices, I'm not sure how to explain DH's situation fully and correctly. There are no unemployment benefits or termination papers, etc. There's just paychecks that stopped coming in. </p>

<p>On the flip-side, what if I do get someone sympathetic in fin-aid and then DH turns around and gets a good contract? What do you do then if your financial situation greatly improves?</p>

<p>We are a family of 5, by the way.
Any advice is appreciated.</p>

<p>^^^^^
I also don't understand the displaced worker thing. Would DH qualify at all for that?</p>

<p>I believe a displaced worker is someone who has lost their job completely...been laid off or job has been eliminated. Perhaps Kelsmom or Nikki can explain.</p>

<p>I think you will have to fill out the finaid forms and then talk to the schools about your new financial situation. It is up to the school to determine how they will deal with this.</p>

<p>For FAFSA the displaced worker is for the simplified needs test and the automatic 0 EFC - both have strict income limitations ($50k and $30k respectively) so you would not qualify for them based on your 2008 (or even 2009 from what you are saying) income.</p>

<p>To be honest even with a projected income of between $60-$75k you will still not qualify for much in the way of federal aid - only loans and possibly work study. Federal grants require a very low EFC which incomes of $60-75k will not qualify for.</p>

<p>The only way you can find out for sure how schools will treat your situation is to apply for aid, provide your financial information, then see if they will make any adjustments for your change in circumstances. With a projected income of $60-$75k this is more likely to make a difference at schools with generous institutional aid, as opposed to federal aid, and then only if they are willing to make an adjustment of some sort. Only they can tell you for sure.</p>

<p>Swim is correct, even given next years projections and the situation, displaced worker isn't a fit.</p>

<p>Also, most FA Office error on the side that the income will be there...unless it is crystal clear that it won't (disability, divorce, etc). FA's take (at a lot of offices): Instead of assuming the parent or student won't have a job/income during the upcoming year, we assume you will. I know our office makes students/parents wait until they have filed the next years tax returns before we will conduct a Professional Judgment based on loss of income similar to what you are describing.</p>

<p>Our office is a bit more lenient in terms of looking at current income. We will adjust when there is a loss of job. Of course, the school is in an area with a VERY high unemployment rate (that is constantly getting higher). In all honesty, though, I am not sure how we'd treat a situation like your H's. I would defer that one to the boss. I certainly would suggest a detailed explanation of the situation, complete with copies of pay stubs and contracts, sent to each aid office. You never know until you try.</p>

<p>We had a higher (10-20%) year the qualifying year before DDs first term, I asked financial aid and they said to do that years taxes ASAP and they would rework our offer based on the current years actual income</p>

<p>For example, 2007 was higher than usual, 2008 was usual, the original 2008-09 offer is based on 2007 but the school will review the completed 2008 tax return and consider a revision.</p>

<p>You should ask them though, what would your offer look like with an income of XYZ (the lower amount) so you see whether that makes a difference to you.</p>

<p>So I'm basically screwed for this year. There are no contracts to show. The old pay stubs would mean nothing. The checks have just stopped coming. I don't see how DH could "prove" his unemployment/underemployment until next year's tax returns. I find it interesting that FA's would "assume" you will have the income. In today's economy, that's just not realistic. We also happen to be in Florida, the 2nd highest unemployment state in the country. </p>

<p>FYI, the schools DD has applied to are Rice, Yale, WashU, Georgia Tech, UF, UPitt, and U of Alabama.</p>

<p>somemom</p>

<p>So you are saying that there could possibly be a revision in aid made in say January of her Freshman year using 2009 income data? Was your revision retroactive to the first term or just for the spring term?</p>

<p>land,</p>

<p>If you find out that the income difference would make a substantial difference, you might consider having your daughter defer entrance after she's been admitted. Of course, you wouldn't say it's for aid purposes; she would have to DO something productive.</p>

<p>I looked back on some of your posts and it really looks to me like your daughter would be a good contender for merit aid at schools that award high merit. I know $ wouldn't be a concern at Yale or Florida public colleges. Have you ruled out Case Western? It might be a good late addition. (good engineering and good merit)</p>

<p>Please contact each financial aid office to discuss your situation. You may find that they will work with you.</p>

<p>Land64shark, I am currently a freshman in college, and my family experienced a similar situation as yours when we completed our FAFSA & Profile for the 2008-2009 year. To make a long story short, my family's income in 2007 was unusually high due to a hefty, one-time bonus that my father received from his job. Also, in 2007, my mother was employed full-time for the entire year (as she has been for 25+ years), but unfortunately, her work schedule was cutback to 24 hours per week in 2008 as a result of the struggling economy. As a result of these circumstances, we knew there would be a large difference in our available income for the 2008 year, compared to 2007.</p>

<p>When I first was accepted to college in the Fall of 2008, I was not offered any FA due to our EFC (based on 2007 #'s). But, my mother contacted the FA office at my school to explain our situation, and they offered us a mid-year FA review where they agreed to re-evaluate my aid based on actual 2008 earnings, using November month-end actuals and projected numbers for the month of December. I believe they were required to send in copies of paychecks as well as fill in a school FA form that requested some additional data. Upon review of actual 2008 earnings, I was granted some aid for the upcoming semester as it was evident that my family's income was substantially lower than originally expected. </p>

<p>I can't say whether all schools are willing to re-evaluate aid packages mid-year. However, as my family found, it is definitely worth calling the FA office of the school(s) that your daughter has applied to in order to see how/if they are willing to work with you on your own situation.</p>

<p>Land shark, ask me in February or March, but the school said that they are allowed to review actual earnings and adjust the package.</p>

<p>Land64shark,
Try to get a feel for FA beyond the first year at the schools your D is interested in. Just because the 1st year is doable doesn't mean the next 3 will be. Conversely, and more likely, if the 1st year is difficult, but better aid will be forthcoming in future years, it may be doable after all. Getting stuck with crummy aid after the 1st year is no fun. If the school can't give you a clear picture of FinAid in years 2-4 that should tell you something too.</p>

<p>Land64shark -- Your H is self-employed. I thought self-employed people have to or may file quarterly? If he files taxes quarterly maybe that could be used to provide an official paper trail of declining income without having to wait a full year.</p>

<p>Nut</p>

<p>Yes, he pays quarterly, but there are no actual papers to file quarterly with the government. You just send in a check of your estimated payment.</p>