Jump to content

Menu

Determining college costs with high AGI but much lower taxable income


Melabella
 Share

Recommended Posts

Does anyone have experience with this situation?  Our taxable income is $43,000 less than our AGI.  Basically, we have a lot of out-of-pocket expenses required to create our income. The npc's do not seem to take this into account.  Our estimated coa is based on our AGI which is significantly more than our actual earnings after expenses.  Will schools take this into account?  

Edited by Melabella
Link to comment
Share on other sites

The FAFSA looks at AGI, taxes paid, income earned, and exemptions from your taxes. If there is a difference, you can request a professional judgement. This means that the college financial aid office will request documents on your special circumstances and may adjust your EFC accordingly. It is up to each office on how they handle such requests. Feel free to message me with more details if you wish. I have worked in FA offices at various types of schools for 12 years and may be able to give you an idea if someone would take your circumstance into consideration.

  • Like 1
Link to comment
Share on other sites

I don't have any direct experience with this but have read quite a few similar situations on the College Confidential forum. Unfortunately, the online calculators are not very accurate for families that own businesses and schools often add back in the business expenses that the families are able to deduct from taxable income.

 

 

Link to comment
Share on other sites

I don't have any direct experience with this but have read quite a few similar situations on the College Confidential forum. Unfortunately, the online calculators are not very accurate for families that own businesses and schools often add back in the business expenses that the families are able to deduct from taxable income.

Pegasus, when you say, "schools often add back in the business expenses that the families are able to deduct from taxable income," do you mean the schools increase aid from the npc estimate based on the lower actual income?  I think that is what you are saying, which gives me some hope. 

Edited by Melabella
Link to comment
Share on other sites

Pegasus, when you say, "schools often add back in the business expenses that the families are able to deduct from taxable income," do you mean the schools increase aid from the npc estimate based on the lower actual income? I think that is what you are saying, which gives me some hope.

I am not sure what you're saying but the way it typically works is that business deductions and retirement contributions are added back in and counted as income. So the higher amt is more likely to be a factor. Ask questions on CC's financial aid forum. People there are pretty knowledgeable and can probably give more accurate answers.

Edited by 8FillTheHeart
Link to comment
Share on other sites

I am not sure what you're saying but the way it typically works is that business deductions and retirement contributions are added back in and counted as income. So the higher amt is more likely to be a factor. Ask questions on CC's financial aid forum. People there are pretty knowledgeable and creative uldmprobably give more accurate answers.

 

Yep. I get why they'd add retirement contributions back in (although I hate that they do that--dh has been disabled since 2000, and we were not able to make contributions for years--now that we can, we have a lot of lost years to make up for and scrimp to be able to, so it's frustrating.)

 

I find it pretty obnoxious, though, that business deductions are added back in, since this puts self-employed at a disadvantage when compared to employees. There are a lot of costs associated with being self-employed, and it's not like one can just skip paying those costs. 

Link to comment
Share on other sites

I find it pretty obnoxious, though, that business deductions are added back in, since this puts self-employed at a disadvantage when compared to employees. There are a lot of costs associated with being self-employed, and it's not like one can just skip paying those costs. 

 

Exactly.  My husband works on 100% commission and is not reimbursed by his company for any of his expenses, which are significant. He has to spend part of his income to make sales. This.is.terrible.

Link to comment
Share on other sites

Exactly. My husband works on 100% commission and is not reimbursed by his company for any of his expenses, which are significant. He has to spend part of his income to make sales. This.is.terrible.

When it comes to FA, fairness has nothing to do with it. It is based on formulas. It works for people for whom the formula works. If the formula doesn't work for your situation, it is what it is. (This is our reality. The formula is not friendly to our reality bc our kids are spread out over 21 yrs.)

  • Like 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...