<p>My accountant tells me the FAFSA and CSS forms do not properly reflect self-employment taxes, that they should be added to income tax figures.
Any comments?</p>
<p>Thank you</p>
<p>No, that's mistaken. The FAFSA calculates FICA based on the amount you list as "income from work". Self-employment tax is twice that amount, but you get a deduction of 1/2 self-employment tax from income, which reduces your AGI -- so it all works out.</p>
<p>Calmom's got it right. It looks strange at first that the self employment tax doesn't appear to get deducted. But it gets calculated by the formula. Tax people often don't know a lot about financial aid formulas.</p>
<p>sbalke is so very correct....tax people, even CPA's know next to nothing in most cases about how the EFC is determined. Never take advise for completingyour FAFSA from any tax consultant...it can cause serious problems.</p>
<p>Uh Oh, he helped me complete it, but said he's done many before.
Anyway, thanks for the info.</p>
<p>Tax people may be able to help you fill out the FAFSA but their mindset is all about minimizing income tax paid, not about improving your financial aid picture...they simply don't think that way, so may not always give the best advice...think about it, most people paying $$ to accountants, attorneys, and CFPs are not qualifying for financial aid, so it is not something they seem to be exposed to and think about.</p>
<p>He may help you fill it out accurately no problem, but he may not be able to advise you on moves to change your finances and maximize eligibility.</p>
<p>suggestions for next year?</p>
<p>Thanks.</p>
<p>Get and read "Paying for College Without Going Broke." It will lay out all the strategies for increasing your potential aid.</p>
<p>Thanks. I will check it out.</p>
<p>I just ordered the book on Amazon and I expect it will be very helpful; and will regret not having it two months ago.
Before completing the forms I had played with some of the schools' online aid/efc calculators, so I had a fairly good idea how variables affected the outcome. But, unless I have a eureka moment with the How to pay for college without going broke book, I don't see how I can substantially influence the result without concealing assets. I can see how shifting them into certain areas (e.g. pensions) and then moving them out if needed might help, but significantly??? especially with penalties imposed.
I dunno.</p>
<p>Anyway, many thanks to all who responded to my question. </p>
<p>This is a fantastic website, easily the most informative on college admissions out there. It was helpful to me last year with my older daughter (now a happy freshman) and was also a great tool with my younger daughter this year (accepted to several schools including her first choice, waiting for other envelopes and will decide based on overnights and aid $). Its great to learn from the experiences of those who have been through the process before and who clearly just want the college that best matches their kids' goals, abilities and <em>our assets</em>. Its just a shame that so many families have to weigh top school vs. retirement vs. standard of living vs. home equity.</p>
<p>The best strategies for a particular family really depend on your situation. For some, there may not be much they can do. But for many, a little planning and a little time can result in a much lower EFC and increased aid.</p>
<p>In particular: many save for college in the student's name. This will severely reduce aid-- these assets can either be spent down on necessary college supplies, or perhaps transferred into a 529 college savings vehicle, which will get assessed as parental assets at a much lower rate (or, for many, not assessed at all).</p>
<p>Similarly, some with parental assets that fall over the asset protection allowance (you need to know what yours is) can pay down their home mortgage to protect that portion that is over the allowance, and get a home equity loan to make the assets available.</p>
<p>These are the sorts of strategies the book covers-- it has dozens of them. All are legal, and ethical.</p>
<p>sblake7,</p>
<p>Thanks again. How can I determine my asset protection allowance? different for each school?</p>
<p>For FAFSA</p>
<p>age 40 - 44 it is $40,100 for a two parent family
age 45 - 49 it is $45,300 for a two parent family
age 50 - 54 it is $51,500 for a two parent family</p>
<p>Right-- and I always recommend the EFC calculator at FinAid:</p>
<p>It's nailed our EFC to the dollar the last couple years. It also details your asset and income protection allowances, and tells you exactly how much of the EFC came from parental assets, parental income, student assets, and student income. That way you can see where you can make an effort to prepare your finances so as to minimize your EFC and maximize your aid on the day the FAFSA is filed.</p>