<p>Trying to navigate the asset dilemma. We own a small S-corp. family run business. We have an 3 month “emergency fund” in a separate savings account to cover business overhead (like medical emergencies, fire, etc) This isn’t available to be used for college costs. Is this considered an asset that can be counted against us when applying for financial aid?</p>
<p>Seems like it would be. We have a regular savings to cover medical emergencies, and insurance for fire. At some colleges, expenses and deductions allowed by the IRS for businesses are included in the financial aid calculation because they are expenses other families have anyway. </p>
<p>If these are regular savings accounts that you have earmarked for emergencies, it probably will count. Are these accounts in the name of the parents or are they in the name of the business?</p>
<p>Assets for a small business are not considered. Kelsmom and some others can let you know more . They are definitely considered for most PROFILE schools. Are the assets in the name of the business? Make sure the business is excluded under FAFSA rules.</p>
<p>My question…is this a regular savings account that the OP has earmarked for emergencies…or is this a business account.</p>
<p>I believe if it is a regular savings, it is counted as an asset regardless of what you “would like” to earmark this money for. In other words a regular savings in the parents names will be considered like ANY other regular savings.</p>
<p>CPT is correct in that the assets of a
Business of this size are not counted. BUT this savings does not sound like a business “asset”.</p>
<p>Perhaps the OP can clarify exactly where this money is?</p>
<p>Yes, the account has to be titled in the business name.</p>
<p>Thanks for the reply. The account is a separate business savings account (we don’t co-mingle w/ other business bank acct. , as we don’t want to pay income taxes on the funds 2X. The ins. policies I mentioned are special overhead stoppage policies (very expensive) and aren’t the regular liability policies business buy for fire etc. Their purpose is to keep your business afloat (payroll, pay for coverage dr., etc. when disabled or your business is interrupted for any reason).</p>
<p>I mentioned that in my post bec/ although we had all this coverage we still cleaned out our business emergency rainy day fund waiting for the ins. coverage to kick in! So we can’t spend that money on college (I’m wondering if the FAFSA will count it against us)</p>
<p>If it is a business asset, then it is figured into the value of the business, and not a personal asset.</p>
<p>Why would having it in the same business account cause double taxation?</p>
<p>Anyway, the two key issues:
- Do you qualify for the family-owned business exclusion? (For example, if you and your friend are in business together and you each own 50% you don’t qualify. If you own 50.1% or more, or your business partner is a close relative, you do.
- Is the account formally in the name of the business?</p>
<p>If you qualify and the account is formally in the name of the business, it is not reported as a FAFSA asset. (However, Profile colleges will consider it.)</p>
<p>Thanks so much for the helpful information! Since the acct. is in the business name only & our business appears to qualify as family owned-100% owned by my husband & I, I think we may be o.k. on that front. I understand some schools will have other ideas on assets…thanks again, glad to find this forum…I’m sure I will have other questions soon enough!</p>
<p>Is there any kind of limit as to how much a person can keep in a small business acct and not have it count for FAFSA. While of course some money needs to be kept there, it seems lik a huge loophole that people could use to hide funds.</p>
<p>A lot of loopholes in FAFSA. You can have Trump as your NCP and still get PELL. And, yep, some benefit from them. But then when you want to go to a school that uses PROFILE, they often check out the fillings in your teeth.</p>
<p>
</p>
<p>So my D has to contribute the gold fillings …</p>