Are small business owners capable of planning for a year where they keep their money inside of their business for the year to have a lower EFC?
How in depth would the CSS Profile go in on this?
My dad and mom own a company together with <50 employees, so they would not be required to report the value on the FAFSA. I know savings get counted at a lesser percent compared to Annual Gross Income.
If you dropped all income besides maybe 30k family income with moderate savings, would you get substantial financial aid from 100% needs-met schools?
I realize it is unethical. I’m already a senior, so this opportunity would have passed for my family already.
Can the family actually live on 30K? if not, the question is moot- once they start writing off groceries as “business entertainment” and gas for the car as “business travel” they are risking a lot more from the IRS than they will benefit from the additional aid.
You’d have to keep that same low income for 4 years, not one.
It only would work for FAFSA only schools, too. CSS Profile schools ask for the business info, and would see the asset there.
Ah I thought you could save up enough to last one year just on savings then take out double the next year from your company.
Didn’t know financial aid had to be renewed.
You re-apply anew every year for financial aid.
Some schools do not require the CSS every year.
People do plan and put all the income into one year, all the health care deductions, big charitable deductions. Alternative minimum tax might play into it, but it is done. I remember reviewing a loan application where a farmer had big income one year, took EIC the next.
It also depends on the structure of the business. If it is an S Corp or an LLC then the profits are reported on the owners’ individual 1040 tax return. It will increase the AGI. The AGI is reported to the fafsa regardless of where the money comes from: wages, dividends and interest, rents and royalties, etc.
This is the case even if the money is left in the business.
From what others posted in the past, most (if not close to all) “meet full need” schools require the CSS.