How to deal with commission income?

headoflife · 10-11-2012, 04:47 PM

How does FAFSA and CSS profile deal with income from commissions? I am in sales, and a huge amount of my income is not salary. I am not sure how much I will make in any given year. Thanks for any help and insight you can provide!

thumper1 · 10-11-2012, 05:02 PM

Your commission incomes income, right? Once you have completed your 2012 taxes, that income will be included as income. You treat commission income the same way as any other kind of income...you include it in the FAFSA and Profile as income.

On the profile, you are asked what your income for 2013 is projected to be. Make your best guess...I'm not sure it matters that much since your financial aid for the 2013-2014 school year will be based on your income from 2012.

headoflife · 10-11-2012, 05:07 PM

I understand, but I am filling out the Profile now, and I don't even know what the next 3 months will look like, much less be in a position to guess about next year. Have others, who earn a significant portion of income via things like commissions, tips, bonuses done anything different to protect against the very real possibility of a dip in income even without a job loss or change?

thumper1 · 10-11-2012, 05:28 PM

Use your best estimate. You will be asked to update the information on the Profile to reflect your 2012 tax returns when they are completed.

If this is for an early decision application, you might want to rethink applying ED...if your income fluctuates that much it might be better to be able to compare multiple offers including merit aid which isnt affected by income fluctuations.

headoflife · 10-11-2012, 05:52 PM

It is not ED, and DS knows he is allowed to apply where he wants, but not fall in love until the numbers come in! His stats and talent shoudl also provide some merit money, but I am concerned about schools that meet need and the uncertainty of the income.

Thanks!

cptofthehouse · 10-11-2012, 05:58 PM

It's your best guess. If you want to guess low, like half of last year''s go on ahead. As soon as you get the numbers after the end of the year, correct it.

bluebayou · 10-11-2012, 06:02 PM

Quote:

If you want to guess low, like half of last year''s go on ahead.

Exactly, but just be aware than any financial aid awards that are developed by the college right now will be preliminary and based on that estimate. If your estimate ends up being extremely low, relative to your actual tax return, any need-based aid will adjusted accordingly.

CTScoutmom · 10-11-2012, 06:58 PM

Make a guess based on last year. Just as you can't guarantee what your commissions will be over the next 3 months, others with a salary can't guarantee that they will be working the next 3 months! Hourly employees may or may not know how many hours they will work, or whether they will have overtime. It's supposed to be an estimate!

mom2collegekids · 10-12-2012, 01:21 AM

Don't guess low. That can backfire. Guessing low would mean getting a better FA offer, being all happy, and then later have much/most/all of it get taken away.

Use reasonable estimates but as these last 3 months progress, keep in mind what you put down and either update (if possible) or be prepared that FA numbers may not be right if your estimates are wrong.

Also...keep in mind...if you have "business deductions" there are many CSS schools that will "add those back in" as income. So, you may find that schools think your income is higher than you think it is.

It is not ED, and DS knows he is allowed to apply where he wants, but not fall in love until the numbers come in! His stats and talent shoudl also provide some merit money,

Well, as long as he has some financial safeties in there, then he'll be fine. You mention that he "should" get some merit money. Unless he's applied to a couple of schools where you know FOR SURE that he'll get merit money, you can't count on that. There are a number of schools that don't give ANY merit money...or only give it to very targeted students (super high stats, URMs, or other hooked students).

Does he have financial safeties that you know FOR SURE that he will get the merit that you need to make them affordable? Financial safeties are schools that you know FOR SURE that you have all costs covered thru ASSURED grants, ASSURED merit, or family funds.

headoflife · 10-12-2012, 03:31 PM

I am planning on reasonable estimates, though I may estimate slightly low, rather than slightly high. I don't want a large unpleasant surprise!

I don't have nay business dedutions, since I work for a company in an office. It is just that much of my pay is commission and bonus.

We can make our state flagship work, although it woudl be tight. He has worked with the music prof there the last 3 summers, and we have been told he would like DS to attend and will get him a scholarship, so that will help. His stats make it an almost guaranteed admit.

He could get full tuition from Alabama, but I don't really think that is the best fir for him.. Running the NPC at the schools has given me some idea, but given the possibility of 2 kinds of merit, I am flying a little blind, but he will not be without any option no matter what need based aid comes in.

cptofthehouse · 10-12-2012, 03:45 PM

If you make it too low, be well aware of it, because the cuts in aid may not be commensurate or proportional, as a lot of people have discovered. It can change sharply at certain set points.

However, the advantage of making it low is that the package estimated and given to you will tend to have the "goodies" available at the time your app is received. I've known families who qualified for more aid, but a lot of the grants were already distributed. These things can depend upon the school. When you guess low, and get stuff, you aren't going to be penalized for the low guess. It just feels like it.