Ok…so you were hoping to delay the receipt of $370,000 a year in commissions? Over two years, that is 3/4 of a million dollars.
I’m sorry…but why wouldn’t your parents use their high income to help you pay for college instead of trying to look lower income (which they are not) so,that you could get more need based aid?
@BelknapPoint or @Madison85 how do business owners have to account for this type of “deferred compensation” for their employees.
@thumper1 I mean it was my idea to think of this. My dad was just like “hmm I could save 60k, wanna look into it?”
If you took out the money over two year vs one, you’d pay about 35k less tax anyway.
@Jpgranier haven’t you already received some merit awards from SMU and CWRU? Those would give you a $20,000 break (were your awards per year…or for all four years total?).
Your family income including mom, dad, and the value of,the business is likely in the $500,000 a year range.
Are you saying your parents can’t afford to send you to an expensive private university? If so, look at your instate publics. You are in Texas, right? Good choices there.
@thumper1 They have offered to pay for any school, I was just trying to find a way to save them money.
SMU was 31.5k a year and Case was 32.5k a year.
Those are two awesome merit awards. That is a better way to save the family money if they are high income earners. It’s honest…and it’s not income dependent.
Why should you get need-based aid with an income of 500k per year…?
Need-based is for those who need it… like families that are making less than the amount college costs or even far lower. Not families trying to manipulate their accounts to appear needy.
I would consult the company’s accountant. If the commission is not paid out, how would the company record it? What would be tax implication to the company?
@Jpgranier --besides the legality of it all, you seem like such a great kid. Wouldn’t you feel bad taking need based aid when you really don’t need it? I totally respect you are trying to save your parents money but your situation is SO not unique. There are SO many families who make too much for need based aid but who also find the full-pay cost at some schools to be prohibitive.
Accept that college is going to cost you $25-40,000 at the schools where you have been accepted. OR–go to Alabama and pay less. You are a smart student and a hard worker and critical thinker. You will do great!
I don’t think colleges have bottomless coffers. If your parents shield 75% of their income and you qualify for a ~$25k/year need-based grant, that money comes from somewhere. Maybe that college only has 20 of those scholarships to give and it saves your family $25k/year that you can spend on whatever, but kid #21 whose family really only earns $100k and who now won’t get that grant, that kid can’t just shrug it off and say it would have been nice to have that savings, but oh well. That kid won’t be able to go to that school. If they’re lucky they’ll have gotten accepted to another school that meets need or one that offers merit, but I think they’re more likely to end up at their state flagship or their local commuter school.
Actions have real consequences for real people. Your parents may not have been on CC enough to see students whose parents can’t pay and whose only hope is to receive a need-based grant somewhere, but you have. Need-based aid isn’t for families who earn half a million dollars a year. I don’t think families who make $125k get need-based aid at many places; I certainly wouldn’t expect it with an income 4x that.
It is illegal. It is tax fraud. Your mom contols the company and defers income your dad earned…I would say if she controls it, he has constructive receipt of the $. A legal income deferral requires a company plan, and 2 years is generally far too short to defer…
Besides, if the company defers it, it gets no deduction and pays tax on it at 35%+ state tax. If it is a partnership, your mom will pay tax on 51% of it anyway.
@austinmshauri Jeez I already said I wasn’t going to do it. The only schools I was thinking about were full needs met schools for that reason…
I appreciate everyone who has given me real honest advice on a topic I had questions about. I’m going to try to get this thread closed.
I think it’s great that you want to save your parents some money. Instead of taking it away (in the form of FA) from kids who actually NEED it to go to college, you could apply to some of the great colleges that give lots of merit aid to top students and then choose from them. I think that is the ethical way to go if you don’t want them spending 60K per year for your college.
Some of those “full needs met” schools do it by being need-aware. Which makes an impact.
This poster already HAS merit awards of >$30,000 a year at both SMU and CWRU…both fine schools. This is saving his parents >$30,000 a year. And merit awards are not income dependent…so he just has these!