Hi all,
I just sold a home which gave me a capital gain about 60K and cash asset around 120K. (inevitable decision with living rearrangement) My EFT was 50-60K. There will be a temporary rise in my AGI this year and my S will apply to college next year. My AGI will be back to average 59K after his freshman year. I have no other significant assets and currently lives in a rental place.
I understood that sharp rise of AGI will affect FAFSA for the first year, but how this will affect normal years after. And what does this mean for CSS-Profile (for the first year and years after)?
I have not decided whether I will buy another home yet. I feel okay for the tap amount of 5% for the cash asset.
Any worth-to-try suggestions will be much appreciated.
M70
Was this your personal residence?
http://www.irs.gov/taxtopics/tc701.html
Have you read IRS Publication 523? You are certain that the gain on the sale of your home can’t be excluded?
I was not able to meet the 5-2-2 rules in the IRS Publication 523.
I don’t think you have to declare the cap gains from a home sale for 2 years…to give you time to buy another home…but check
IRS rules and FAFSA/PROFILE rules differ. If your 2014 income is unusually high due to one time factors, you can request a professional judgement from each school regarding inclusion of that income. Some people have gotten such exclusions, but from what I’ve seen, it’s been when the reasons involved hardship (loss of job payout,need to break into 401K for emergency, etc). A friend of mine who did appeal a one time payout was denied, not only by the school that his daughter attended but by numerous school to which his son was applying. He decided that the differential in aid was large enough for for both kids to take off the year and they gave it another go the next year, when income was much lower as well as assets. But YMMV.
In case your child’s schools expect you to pay too much due to increased income and assets (both), apply to some schools where your child will get lots of merit…then these financial issues won’t matter.
Thanks for answers. I have read other threads and knew that there will be no easy answers.
CSS Profile is asking two years of tax returns, could this help to explain the situation?
@mom2collegekids,
Do you mean private schools? What kind of merit based opportunities/schools will be around?
@cptofthehouse,
Is there other kind of “request for professional judgement” other than the appeals after the initial decision?
An appeal is different than a request for professional judgement or a special circumstances consideration.
In an appeal, you lay out any new financial occurrences, and maybe you ask the school if they will consider offers from other schools. And you ask for a reconsideration of your financial aid award based on that.
Professional judgement …you are showing the school some financial extenuating circumstance and asking them to eliminate that from consideration when computing your financial need. Typically, this could be a one time bonus, an inheritance, severance received due to job layoff…anything that would inflate your income. It could also be a request for a dependency override, or something like that. The financial aid department can make a decision to adjust your family contribution.
Special circumstance consideration…this usually happens when the financial situation changes dramatically…loss of job, huge unreimbursed medical expenses, some other financial crisis…and the student is asking for a reconsideration of their need based award based on the new special circumstance.
Note…all of the above are done on a case by case basis. None are required by any college, and some colleges actually do none of the above.
What would your EFC be without the gain and cash-in-the-bank?
@Madison85
without the gain, EFC was around 6K with the 2012-2013 EFC chart.
with gain and cash, it rises to 24K using the same chart.
The asset protection allowances have decreased a lot in the last few years. If you want you can recalculate the EFC using the 2015-2016 fafsa formula guide.
http://ifap.ed.gov/efcformulaguide/attachments/090214EFCFormulaGuide1516.pdf