<p>You said your wife has s-corp. Therefore, as an officer she should draw salary, which will have to be reported on line 7. The profits (after all expenses including wages are deducted) need to be reported on line 17. </p>
<p>if she has c-corp (I have never seen single member corp to elect to be c-corp especially with the income you reported because of unfavourable corp tax rates and double taxation issue) only distributions are taxed on personal tax return. In the end it would not matter because you most likely willl have to report all profits from c-corp on profile. Somebody in-the-know should clarify how single member c-corps are treated on profile. But I doubt your wife has c-corp, so what I said earlier is correct.</p>
<p>Finding0- Money left inside the company does show up! It shows up as profit to the company if you are legally filing corporate taxes. The money doesn’t just disappear inside the business where financial aid administrators can’t see it. If it does, you are illegally sheltering profits. I don’t think you want to go there. Any profit to the company flows through to the K-1 which gets reported on your personal return.</p>
<p>Thanks to all for sharing your knowledge. I will explore all the ideas suggested here.
Maybe I’m misinterpereting, but several have mentioned colleges that ‘meet all need.’ I’d be happy with any help at all. I never expected more than that, but PFCWOGB suggests all the things to do to maximize that help. My wife got the idea from there. Here’s the paragraph.
" If you own and control a business with fewer than 101 full time employees (as of 2006-7) ‘snip snip’ the net worth of these small business need no longer be reported as part of business/farm assets on the FAFSA. I think we are all on the same page here. BTW about half the colleges we are looking act use th FAFSA formula.</p>
<p>Sir! I don’t think YOU want to go there. We are discussing possible legal strategies as parents and not financial experts (at least I’m not). To suggest anything else is rude!</p>
<p>I have little experience with FASFA only schools. But, for an S corp, profit from the business does flow through to personal income and I believe that is counted on FASFA. But, remember, the most generous aid comes from those schools who use CSS profile as well as FASFA. The one FASFA only school a child applied to gave us no aid at all. CSS schools were much more generous, despite having a profitable business. I doubt you would to better with FASFA only, but it’s worth a try.</p>
Retained earnings in a S corp still flow through to the owner’s tax return as income on line 17, regardless of whether the money sits in the business’s account or the money is distributed and it sits in the owner’s account.</p>
<p>If you leave the money in the business then it won’t get counted as an asset for FAFSA, however the FAFSA EFC is very heavily income-weighted unless you have a lot of assets. So unless it is a lot of money, it won’t make that much difference for FAFSA EFC (a maximum of 5.6% of assets are added to your EFC).</p>
<p>Maybe I’m misinterpereting, but several have mentioned colleges that ‘meet all need.’ I</p>
<p>Yes, there are SOME colleges that “meet need”. Maybe some of the “changing lives” colleges do, but some DON"T.</p>
<p>And, guess what? The ones that “meet need” are the hardest to get accepted to…because they do meet need and a gazillion apply.</p>
<p>Maybe someone here knows which CTCL schools meet need…if any.</p>
<p>And…colleges that “meet need” usually use CSS Profile and that is not usually favorable to those who own their own businesses. Deductions get added back in. And, if I remember correctly, you don’t get to deduct the fact that you pay the full big % for FICA that self-employed people pay.</p>
<p>New College of Florida is a CTCL school, and does provide both in and out of state students with good merit and need based aid. but they do not meet need by any means, don’t know any schools that do other than the Ivies.</p>
<p>Many of the CTCL give good merit, and some, such as Wabash, claim to meet full need. Typically, whatever merit is given will be deducted from the need based aid. </p>
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<p>There is a list of about 30 schools. But, if you have a business, the need as calculated by each school varies widely.</p>
<p>Are you instate for New College? If not, then meeting need or close to it may be difficult. The Florida publics seem to rely HEAVILY on Bright Futures to help fund their students. </p>
<p>I know that NC does give merit to OOS students, but if the overall OOS cost is high, then you may still owe a chunk. OOS COA is $42k…so even a merit scholarship of $15k per year, would still leave a good bit.</p>
<p>Have you looked at Birmingham Southern? It’s a CTCL and is known to be generous.</p>
<p>The only in-state schools we’ve looked @ are DePauw and IU. Most are in neighboring states. Next will be Allegheny, Kalamazoo, Lawrence U, and St. Olaf’s (rated best food, worst winters)…lol…</p>
<p>When a school gives merit, be aware that it is unlikely to reduce EFC.</p>
<p>There are schools besides ivies that meet 100% need - like Reed College, which is also a CTCL school, but Reed is need aware & does use Profile to determine institutional EFC.
The acceptance rate to Reed has also dropped considerably since my daughter first applied 12 years ago.</p>
<p>Depauw is a private university, isn’t it? Your state of residency doesn’t really matter for that in terms of cost. Is the ONLY instate public you have looked at IU (which IU…there are NIU, EIU, WIU, SIU…or just IU…what about UIUC?</p>
<p>There are many more colleges that meet full need than just the Ivies…this from another source…you would have to verify with each college.</p>
<p>Amherst College MA
Barnard College NY
Bates College ME
Blessing-Rieman College of Nursing IL
Boston College MA
Bowdoin College ME
Brown University RI
Bryn Mawr College PA
California Institute of Technology CA
Carleton College MN
Claremont McKenna College CA
Colby College ME
Colgate University NY
College of the Holy Cross MA
Columbia University NY
Cornell University NY
Dartmouth College NH
Davidson College NC
Duke University NC
Emory University GA
Franklin W. Olin College of Engineering MA
Georgetown University DC
Gettysburg College PA
Grinnell College IA
Hamilton College NY
Harvard University MA
Harvey Mudd College CA
Haverford College PA
Macalester College MN
Massachusetts Institute of Technology MA
Middlebury College VT
Mount Holyoke College MA
Northwestern University IL
Oberlin College OH
Occidental College CA
Pitzer College CA
Pomona College CA
Princeton University NJ
Rice University TX
Scripps College CA
Smith College MA
Southern Arkansas University AR
St. Olaf College MN
Stanford University CA
Swarthmore College PA
Thomas Aquinas College CA
Trinity College CT
Tufts University MA
Vanderbilt University TN
University of Chicago IL
University of North Carolina—Chapel Hill NC
University of Pennsylvania PA
University of Richmond VA
University of Southern California CA
University of Virginia VA
Vassar College NY
Washington and Lee University VA
Washington University in St. Louis MO
Wellesley College MA
Wesleyan University CT
Williams College MA
Yale University CT</p>
<p>I believe the above list (excluding Princeton) ALL use the CSS Profile. Princeton uses its own financial aid form which asks for very similar information to the Profile.</p>
<p>Aside from everything else here, which i don’t know a lot about. Did you say you have ONLY your 401k and the MM? Are there any other liquid assets? You want to spend your entire MM on your WIFE’s business?</p>
<p>Doesn’t make sense to me. You’ll be losing your liquid/emergency funds, and if it is indeed your WIFE’s business and something happens…your $ could be gone in the wind.</p>
<p>Generally, 8 months of expenses should be available as liquid…</p>
<p>Also, did you mention if there is a college fund, or are you hoping by spending the MM she will get FA to cover it? Is part of the MM going to pay college bills, or just your wife’s bills?</p>
<p>Sorry if I got this wrong, but thought I’d mention what came to my mind in case it was relevant. I get reducing expenses to help on the FAFSA, but keep in mind what you GAIN in FA (which is not guaranteed) and as others have told you how much of assets are protected) and consider what you RISK by spending it all.</p>
<p>Also, if you pay the expenses of your wife, won’t her income go UP because how will your payments be reflected on the books, plus her expenses will be reduced. You are just shuffling $, not spending it (in my eyes). Spending would be buying tings you’d otherwise finance, not just spending to make the $ go away.</p>
<p>If you pay the business bills you better make sure you get your name on the business, or something…</p>
<p>I think some of these financial gymnastics end up biting families in the fanny when they realize that they didn’t get as much as they needed in free money and they need the income or savings to help pay for college.</p>
<p>A mom told me today that she knows some dads who’ve actually quit their jobs thinking that their kids will get more FA. Wow. These people would rather live on one income (wife’s’) and possibly jeopardize their ability to get back into their careers once the kids are out of college than actually pay a share of their earnings towards college? That seems way “out there” and probably won’t work out too well in the long run.</p>