<p>I was re-checking my CSS Profile before sending it and noticed the self employement question asks to be answered as yes ONLY if one is involved in a partnership, etc. </p>
<p>I have an S Corp, which is technically not self employment. But I'm the only officer so I have to pay income taxes on, and report as income - all profits. If I don't check "self employed"...I don't know how I'm going to be allowed to explain how terribly it skews my figures. I'm sure this has to be very common so I'm hoping someone knows how to address this. </p>
<p>Let's say my company makes $100,000 in profit and I use $50,000 to pay salary and I pay those income taxes. BUT...the other $50,000 stays in the company as operating expenses yet I have to also pay income taxes on that, and report it as income. So my AGI shows $100,000 even though I don't HAVE that money. Then, if I do use that money the next year to pay my salary...I have to report it AGAIN as income and pay income taxes on it AGAIN, and it's listed on the FAFSA/CSS profile as income - you guessed it - AGAIN.</p>
<p>It's a known but sad side effect of an S corp, but it sure is hurting me in a HUGE way in these forms. </p>
<p>AM I MISSING SOMETHING? This has to be a very common scenario. </p>
<p>If I'm paid through an S corp of which I'm the sole officer...am I self employed or not?</p>
<p>I’m gonna bump with another question of my own re: the question “How much can your parents pay for college?”</p>
<p>I answered honestly, and it’s NO WHERE NEAR my EFC (due to the s corp thing and a bunch of others that aren’t factors, such as my move into a mold infested money pit of a nightmare and health issues etc).</p>
<p>The number I gave IS relatively close to elite schools that meet middle income need. But not to what I think other schools will offer. Do you think schools deny kids with a gap in this number? So they’ll maintain a good yield? Not that it matters, we can’t afford the full fafsa EFC and have a safety. Just wondered what you thought.</p>
<p>Your question is if your company has $100K in income (not profit, right?) and pays $50K to you in salary. The other $50K appears on your personal tax return as net earnings passed through from the S-Corp. You are taxed on these net earnings on your personal return. You’ve decided not to take a distribution of these earnings but instead to retain them in your corporation, to be used the following year to pay salary and other expenses. If your corporation has no income the following year, then you can (theoretically) pay yourself $50K in salary that year, which would show up on your personal return. Since you’d already paid taxes on that second $50K in year 1, paying it out as wages in year 2 doesn’t sound like a good idea because you’re paying taxes twice. However, your corporation would have a loss which would also show up on your personal return and reduce your AGI. If you have $100K in income in year 2, then you’d face the same issue of retained earnings vs distributions. </p>
<p>I think the best thing would be to take at least part of that remaining $50K as a distribution in the current year, rather than leaving it as retained earnings in the corporation. Either way, you’re paying taxes on it on your personal return, and the total $100K shows up in your AGI ($50K as wages and $50K on line 17/Schedule E income). </p>
<p>I don’t have the Profile form in front of me, but I don’t think business income is double-counted in the case of an S-Corp.</p>