<p>I have a question regarding receiving a large sum of cash after you have already submitted fafsa in 2 differe scenarios. Do you have to report the increase in your bank account? I submitted my daughter's app back in March.</p>
<p>Scenario 1: Let's say I decide to sell my house and deposit like 300k because of the sale...would I need to update anything? Since this will be after (3 months after), I would not need to right since technically as of the date we submitted our form this didn't happen yet? I'm just concerned that the school or government will check my bank account and all of sudden see +300k there and be suspicious.</p>
<p>Fyi, my daughter's school selected us for verification after and I provided all necessary
documents already with no problem. Our EFC was about 3900 if i recall. However, if they check again obviously my efc would be much higher and my DD probably wouldn't qualify for anything.</p>
<p>But will they check again (maybe before they actually disburse funds around august) and this time I will have to show the large amount of cash I received from selling my house after I submitted in March? And no, I did not purposely wait until after I submitted fafsa to sell our house...</p>
<p>Scenario 2:
I also have a business partnership (family owned and < 100 employee) and I qualify for not having to report any assets of my partnership on my fafsa. However, what if my business decides to distribute cash to its partners (it's NOT new income, as this would be cash from previous years etc. that's already been reported and filed into my own individual tax returns already). So for example, if today my business distributes 50k to each partner and I deposit that into my personal checking, will I need to report this change too? Again, this will all be after I submitted fafsa and not purposely done after it to avoid having to report it prior to submitting.</p>
<p>I'm still relatively new to all of this fafsa process in regards to parent's assets and would really appreciate any feedback.</p>
<p>Your assets (money in bank accounts, real estate other than primary home, etc) are reported as of,the day you file your FAFSA initially and are NOT changed when you update the FAFSA. If that money is sitting in your account next year when you file the FAFSA, you will need to report it.</p>
<p>With regard to your business, I’m no accountant, but it would be VERY careful about mingling business assets with personal ones. In addition, a distribution paid to you by your business in 2014 would probably need to be reported as such on your 2014 taxes, and will be reflected on your 2015-2016 FAFSA.</p>
<p>Re: verification…they are checking to see that your financial aid application forms actually are honestly and accurately completed. If they see something that is incorrect, the financial aid officers are required to make a change. </p>
<p>What I’m saying…your financial situation IS what it IS. Answer honestly and that is that.</p>
<p>If I were guessing, I’d say your AGI and your gross income are significantly different…is that right? Don’t be surprised if the school scrutinizes your business deductions for tax purposes, and adds some back as income. That happens.</p>
<p>No not taxable income in scenario 2 as it would seem that taxes were already paid…BUT that money, if sitting I.n the checking or savings account on the day the NEXT FAFSA is filed for the next school year…will be considered an asset.</p>
<p>In regards to scenario 2 as you stated above thumper, correct I understand that for next year 2015-2016 I will report it and will rightfully do so (if it’s still there unless I buy other things with it). I’m just concerned if I need to report and update it NOW for this current year 2014-2015. I shouldn’t need to right since it was received AFTER i submitted fafsa in march?</p>
<p>As Madison85 stated, it’s correct that it’s not taxable income because I already paid taxes on it in previous years and was already reported and filed as part of my income in previous years. My business and my partners have always left large amount of cash in our business checking account in case we need it for the business but any income from the business has been reported/taxed paid since a partnership is taxed through to your personal 1040. However for fafsa this year, I didn’t report any value of my business (including cash in the business checking account) since fafsa didn’t require me to report my business assets. But now, my business will be distributing assets (the cash in the business account) and I will be depositing a large check of 50k+ to my personal checking account soon (possibly next month).</p>
<p>So will the school/gov’t check my bank account from now until the end of the year? I’m worried that they may think I tried to lie but I didn’t because when I submitted the fafsa in March, this distribution (50k+) into my bank account did not happen yet.</p>
<p>Also, as a different example like in scenario 1 I noted above, what if sell your house like a few months after you have submitted fafsa? Obviously you will receive a large amount of money into your bank account…so will they make you update your fafsa (after you have already submitted) and your EFC changes? I’m thinking, since it was after the fact, you would not have to update your fafsa and tell them of this right?</p>
<p>No one is going to “check” your bank account.</p>
<p>As noted above, your assets are calculated as of the day you originally file FAFSA. Period. No exceptions. If you later amend FAFSA to update your 2013 income, you would not update your assets.</p>
<p>Dodgersmom,
thank you the straight forward answer! This definitely relieves a lot of the worries I am going through.</p>
<p>Just curious: My DD’s school already selected my daughter for verification and we gave them everything they asked for and they have now processed our application. But…</p>
<p>Will the school/gov’t ask for my bank account statements AGAIN for the rest of the year? Back to the point that fafsa calculates your assets as of the day you originally filed fafsa, if they do ask for bank accounts, will they ask for the time period from the day we submitted and prior months and NOT for statements after right? Like I mentioned, if they ever ask us to provide any current bank account statements AFTER we filed in March, they will see the new large sum of cash I received from my business distribution/selling my house…</p>
<p>Will your daughter be a freshman in the fall? The 2014 FAFSA for the school year that begins this August/September is only for income earned in 2013 and assets held on the day that the FAFSA was filed. The income from the sale of your house will need to be reported on the 2015 FAFSA that you will fill out for school year that begins NEXT August/September. </p>
<p>She’s actually going to be a Junior this coming September. Yes, the income from the sale of my house would be reported when I file for NEXT year, 2015-2016 I understand that as the income will be reported on my tax returns. I’m really just specifically asking about that money from the sale of my house that I will deposit in my bank account RIGHT NOW.</p>
<p>Also, the large of sum of money that I will deposit into my bank account (AFTER submitting fafsa) that will be distributed from my business partnership. This large sum of money was already previously filed and accounted for in the past as it’s not taxable income (it’s not new income earned but rather money or liquid assets in my business that will now be distributed to my own personal account).</p>
<p>So basically what I’m just worried about is that will they check or even consider it a factor if you receive and deposit a large sum of money in your bank account AFTER you have already submitted fafsa and will it affect THIS current year.</p>
<p>@22wol22 - I have never heard of a school requesting verification of a bank account balance . . . and by never, I mean not ever in the 3+ years that I’ve participated in this forum.</p>
<p>And, if a school was ever to request such verification, what they would need would be verification of the amounts in your bank accounts as of the date you filed FAFSA. But again, I’ve never heard of that happening (although a lot of parents save a snapshot of their online bank statement for that date, just to be on the safe side).</p>
<p>With regard to the federal government . . . although it is involved in the processing of your FAFSA, it has no role in determining your eligibility for aid. That is up to the individual educational institution. So, even though the federal government may select you for verification, it is not in any way involved in the verification process - that’s the college financial aid officer’s job.</p>
<p>Even though your BUSINESS paid taxes on that large amount of money, once it enters your personal account, wouldn’t it need to be reported on your PERSONAL taxes for 2014??</p>
<p>The same money can often be taxed twice (or more). For example, if I won $1M in the lottery, I would owe taxes on it as income. If I then turned around and gave that same money to my daughter, I would owe gift taxes on all of it except for the $13K that is exempted.</p>
<p>I know of several FAFSA audits. Not many at all over the 20 years I’ve been aware of the financial aid process. The request is for verification of assets as of the date the Fafsa was transmitted, and in some cases there were signs of other assets still in place left off as of that date that apparently was the concern. </p>
<p>Life goes on after you file FAFSA, so there is no interest in assets thereafter unless fraud is suspected. It’s expected that assets will go up and down after that date. And it’s considered smart planning to pick a date when the assets are low. Payday is not a good day, nor do you want to be holding earmarked funds in an account that day, as you are supposed to report those amounts and then ask for exception if they are truly earmarked. One has a lot of flexibility in picking the day to report the asset owned.</p>
<p>@KKmama no because business income from a partnership is taxed at the individual level and the partnership itself doesnt pay the tax. For example, if your business in 2013 earned 50k in income, then the 50k is passed through to your personal account and taxed there. The 50k is part of the individual’s income so theres no hiding that. However, the 50k can be left in the business for business reasons so if the owner leaves it in there, according to fafsa if business is family owned and you qualify to not report it, it wouldnt count as your asset. Is this correct?</p>