Okay, so I’m a senior in high school and I understand next to nothing about money just to put that out there.
Last year, we sold some stocks my grandmother left me to put the money in my parents’ names (they had barely any assets so it wouldn’t really make a difference FA-wise). I was filling out a bunch of NPCs using mine and my parents’ tax returns and I guess from selling the stocks I received like $1000 in dividends but I lost like $700 in capital losses (fyi I have a vague understanding of dividends and have no idea what capital losses are). However, a lot of NPCs only asked for dividends not capital losses. I didn’t even realize that until it said one school was expecting me to contribute over $10K (for none of the other ones it was a problem). I adjusted the dividends number and my contribution dropped a lot.
When it comes to actually receiving FA packages, will this school likely still expect me to pay $10K+ or will they see the capital losses too? Will the dividends/capital losses affect my actual FA packages even at the schools where the NPCs didn’t calculate a problem? I’m mostly applying to LACs that meet most if not 100% need.
Only realized capital gains or losses affect taxes, and therefore the FAFSA. I don’t believe there is a specific place to list unrealized gains or losses on the FAFSA or CSS PROFILE. However, dividends are by definition realized as they are paid to you, and therefore you must report them.
I am guessing that the capital losses are indirectly accounted for in the calculation of existing assets. For example, if you had a $700 capital loss on a $1700 asset you would then report an asset of $1000 which would account for the loss. Dividends are cash payments that accrue to you during the year, sort of like interest.
@4kidsdad No, when I dropped it from $1000 to $300, my contribution went from $10,933 to $5,100 (much more in line with what other calculators were giving me)… And this is my contribution, not my parents’ (theirs stayed the same)
@BelknapPoint Where would I account for it? It doesn’t ask for it?
The collegeboard NPC questions for student finances as far as income are just how much I earned from work, how much interest and dividend income I received, and untaxed income.
Here’s a case where a NPC is not detailed enough to give an accurate approximation. The FAFSA asks about student income from work, but it also asks about student AGI from the tax form, and that’s where a capital loss is accounted for.
@BelknapPoint Oh okay. And my thought process was maybe they think if I’m getting this money in dividends I have stocks to sell? Although my assets (including investments) were accurate and quite low. I’m honestly so confused. Would it be weird if I called the school’s FA office? Or should I just forget about it and wait to see what the actual package is in the spring if I get accepted?
Any stocks you might still have will be reported with assets and taken into consideration when need-based aid is calculated. If you called the FA office, what would you ask them?
I don’t have any stocks left. And I would probably just see if they could give me a better idea of what my FA package would look like. Idk, if it’s going to be similar to the NPC, I probably won’t apply. There’s no point in me wasting money on the application fee and wasting their time with my application if there’s no way I would be able to afford it. It’s a small LAC, by the way. Do you think they would be able to help me in that respect?
Some schools will do a financial aid “pre read” to give you an idea of how much need-based aid you might qualify for, and some will not. If there’s not a policy on FA pre-reads spelled out on the school’s website, it wouldn’t hurt to call and ask if they will accommodate you. The worst thing that can happen is they say “no.”
There is a chance that student dividend income triggered a bug in the NPC. Probably not many students that have dividends apply for financial aid at this college.
I’m assuming “last year” means 2015. Did you file a 2015 tax return? Not sure you were required to, but that would probably have given you the option to take the losses into account. But when did your grandparents leave you these stocks? Are you sure you have a loss? Do you understand the concept of “basis”? I’m worried about you asking for advice on this forum.
@AboutTheSame I work so, yes, I was required to file a tax return. Because of the stock stuff I had to file a 1040 so my parents had their CPA do it with theirs. I guess I’m not sure if I had a loss but that’s what it said on the line that said “capital losses”. I’m just wondering how this would affect FA.
Sounds like the NPC was “imputting” assets based on the amount of dividends reported. When you reported more dividends the NPC increased your “imputted” assets based on a formula specific to the college. As you reduced your dividends the students’ “imputted” assets decreased and therefore so did the contribution. Using a 3% imputation percentage a $5,000 change in student contribution would not be unreasonable for a $700 change in dividends.
However, given the circumstances you need to contact the school and tell them that you sold the assets so they can make the appropriate adjustments.
