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OK, my parents own a Subway restaurant. Technically, I am employed there and I did actually work during the summer of 2001. But for tax reasons I have still been receiving a "paycheck" of about $3,000 per year, which of course goes into my parents' account. Now, while filling out forms, my dad puts this under "student assets" even though I actually don't get this cash and I don't have any assets to show from my previous "paychecks." Is this going to skew the aid package I get if they think I have more resources than I actually do?

By Gammon (Gammon) on Sunday, January 04, 2004 - 02:19 am: Edit

Perhaps I should also mention that we operated the store at a loss last year of about $-5000. But my dad did the payment thing to my 2 siblings as well. I think it means we pay less in taxes, so we actually did turn a slight profit, but not officially and my siblings and I were officially paid $3000, but didn't actually get any of it.

*sigh* I'm not sure my dad knows exactly what he's doing. And I'm not sure about the legality of it. I just don't want to be screwed for financial aid.

By Emilyp114 (Emilyp114) on Sunday, January 04, 2004 - 08:59 am: Edit

I don't know how these things work but I can't imagine that receiving a paycheck for not actually working is something that the IRS is going to be happy about. If it's showing as a student asset, then I'm sure the FAFSA people are going to expect that that money is available to you.

By Northstarmom (Northstarmom) on Sunday, January 04, 2004 - 11:03 am: Edit

It sounds like your dad is misleading the IRS, which may save him on his taxes, but he'll lose that savings when it comes to your getting financial aid. If he wants you to get more aid, he should just tell the IRS the truth.

By Vadad (Vadad) on Sunday, January 04, 2004 - 01:22 pm: Edit

In matters involving taxes and the many entirely legitimate ways to avoid them, I'm not willing to opine on how the IRS would view the situation, if it ever did. Hiring family members is a pretty common method small businesses use to reduce business income. I will say that the Dept. of Education does seem to want consistency between the FAFSA and tax returns, and to the extent that answers your question, you should be consistent. I doubt the $3000 in income, unless it's sitting in a savings account in your name, is going to have much, if any, impact on your financial aid award. It shouldn't be listed as an asset unless it's sitting there and available for use. It should be listed as income to you if it's reported as income to you on your tax returns.

By Emeraldkity4 (Emeraldkity4) on Sunday, January 04, 2004 - 01:28 pm: Edit

You will have to submit income tax returns and W-2 forms to your school. As FAFSA considers student income to be more available than parental income for financial aid, you may see your EFC higher than expected

By Vadad (Vadad) on Sunday, January 04, 2004 - 02:15 pm: Edit

Using the calculators at finaid.org, it looks like the federal methodology would increase your EFC by $100-130 (depending on state of residence) with $3000 in income. Under the institutional methodology, it makes no difference (the student's expected to contribute $1000 whether he's had any income or not).

By Gammon (Gammon) on Sunday, January 04, 2004 - 02:32 pm: Edit

Thanks