CSS Profile messed up my financial aid

colfac92
Fri, 15 Apr 2016 01:49:23 +0000

@Mama2Drama, an “s-corp” is what is called a pass-through entity, meaning that the corporation’s profits (or losses) are passed through to it’s owners (proportionally to their ownership share) for them to report (and pay taxes on) on their own return – even if these owners have not actually taken a “draw” from the company. In other words, the company money is the company’s money, but the owners pay the taxes on that money rather than the company paying taxes on it, even if the owner’s don’t ever receive that money from the company.

As to colleges wanting to see business tax returns, one of the colleges that my son applied to did want to see our s-corp’s tax returns, another one asked us to complete the business supplement to the CSS Profile.

edited to add: the rules for S-corps require that owners who work in the corporation do need to get paid a reasonable salary for their work, and can’t just get paid by a “draw” from the profits (which would not be subject to payroll taxes). As CFO, the OP’s stepdad should be considered an employee of the company as well as an owner, receiving a salary that would be reported on a W-2 just as any employee would receive from their employer.