Family Income

pbbuff · 10-27-2009, 07:41 AM

Okay so, I would say my family is upper middle class--our house is worth about half a million, we drive three lexus's, my brother goes to NYU... but both of my parents own their own businesses. When I was filling out my applications, I asked them for the family income, expecting it to be around $200-250k, but my mom told me it was actually negative and to put below $40k.
Is this really the income? Well I guess none of you guys would know, but I'm still confused as to if I should put it or not. $40k is really low... I don't want to be lying to colleges.

oldfort · 10-27-2009, 08:16 AM

You will need to supply your parents' tax return to schools. They are not going to take your word for it. It's similar to when I apply for a mortgage. On the application they'll ask or my income, but before the final approval they'll want to see my tax return and pay stub for verification.

Your parents probably have their business pay for your cars, and a lot of household expenses. I wouldn't be surprised if your brother is on FA at NYU. I have seen many business owners declare no income because they deduct a lot of expenses. If your parents are doing that, I hope they have a very good accountant and do not get audited. On the other hand, it has been tough 2 years for business. Your parents' income may have just dropped down to $0 because of the economy. If your parents' income just dropped recently, you may still not be eligible for FA depending on their assets and previous earnings. Try to sit down with your parents to discuss how much money they'll be able to contribute to your college tuition. Since this is their second time around, they should have a pretty good idea on how it is all done.

mom2collegekids · 10-27-2009, 08:42 AM

How are your brother's college costs being covered?

If you apply to a private school, they will likely look at assets. I don't think it will look good if your parents are subtracting Lexus payments for 3 cars and other such things to reduce their business income.

Private schools may also doubt such a low income when living in an expensive home. How are your parents paying for that? Or are they deducting their home costs from their business income, too. It looks like your parents deduct a lot of living expenses from their business incomes in order to look like they don't earn much.

BTW...the fact that you're surprised by their supposed low income strongly suggests that there is something funny going on here. Rarely is a high school senior that far off in guessing his parents' income.

T26E4 · 10-27-2009, 10:19 AM

It's possible that your parents' income is low for tax purposes. It's likely that their worth is being returned into the business. Common practice. That being said, the valuation of your properties will be fully taken into consideration.

applicannot · 10-27-2009, 10:23 AM

If you apply to a private school that uses the CSS/PROFILE (I believe NYU is FAFSA only), colleges are probably going to sense something fishy - especially on the business supplement and the supplemental questions (some schools ask the make, model, and number of cars).

zpop · 10-27-2009, 10:24 AM

I think the forms ask for AGI (adjusted gross income)regardless of business expenses, maybe I'm wrong. Hard to hide $200K in business expenses in that column.

alamemom · 10-27-2009, 10:53 AM

I may be wrong, but I read the OP's question as asking about putting the income figure on the college applications, not the FAFSA.

mom2collegekids · 10-27-2009, 11:02 AM

^^^

If the OP puts down $40k income on his apps, then "need aware" schools could reject his application.

d'smom · 10-27-2009, 11:10 AM

I would tell you parents to be very, very careful in this department. It's highly unethical to lie about what you make and what your worth is.

You will need to base things off of your parents tax returns anyway, but they will also look at the value of your home. Nobody makes 40k per year and lives in a 500k house. Now, your parents could possibly have a year where they did actually have a horrible year, but that would only factor in for that particular year. The next year things could be totally different and they may actually make a lot more money. Have you asked them what they average per year in income recently?

Ultimately they will also look at your parents equity in your home, savings, 401k accounts etc. and they will look at the overall picture. Whatever you do, be careful and ethical or you could end up not getting in anywhere.

mom2collegekids · 10-27-2009, 11:34 AM

^^^

Very good advice! If it looks like your parents are just trying to come up with excuses not to pay for your education, then you better look for schools that will give you merit money (hopefully you have high stats).

Erin's Dad · 10-27-2009, 12:45 PM

It's very possible the income is below $40k right now. When the FAFSA or Profile are filled out all the data for the school and gov't to make an informed decision about financial aid will come out. Until then, given the info provided by the parents, I would put the $40K on the app.

mom2collegekids · 10-27-2009, 12:48 PM

^^^

That could hurt him if the schools are "need aware". He needs to consider that, and tell his parents that putting a low number (if it's not really true) could hurt his chances for admission at "need aware" schools.

And...if their income was really that low, one or two of those Lexuses would be gone, because their house payment and property taxes would be eating up that $40k.

d'smom · 10-27-2009, 12:49 PM

I agree with Erin's dad provided the 40k is really what will come out as their "income" in the end based on the other forms they will be filling out.

pbbuff · 10-27-2009, 03:27 PM

I haven't started my financial aid yet, but I think either the Common App or ApplyTexas asked for my family income. I just don't feel that the figure is that accurate--but, both own their own businesses so it's not like they are have a salary of $xxx,xxx per year, and their businesses are struggling. I'll tell my mom about it...
I'm not completely sure about all the facts and figures, but I think NYU is ~$50k, no? My brother received about $20k in scholarships, he says

hmom5 · 10-27-2009, 03:47 PM

With Profile schools, what your parent's take as business deductions on their taxes and what the school will allow are 2 different things. In addition, most schools will see the businesses as an asset and attach a value to them that will be reflected in your EFC.

Bottom line: it doesn't matter what number you write down. The schools will use their taxes to determine your parents' income in their eyes.