How does one time capital gain count in income?

Paying for College
1

I will be filling out FAFSA shortly. In 2014 I sold a house with my soon to be ex-husband. I declared my share of capital gains on my 2014 1040s. This was a one time event. Does FAFSA ask you to break down capital gains income vs regular income? Don’t want this one time event to hurt me when it comes to seeking aid.

Good news for those who “know” me – I don’t need any info from ex if we’re separated. So I can complete FAFSA with just info instead of waiting for him.

Thanks in advance

2

The house was sold in 2014? And you’ll be filing FAFSA in 2016 using 2015 info right?

3

Good question. Since I’m self-employed and K1s aren’t available til later, I usually file an extension (for example, I only just filed 2014 1040s on Oct 15). I guess I should use estimated 2015 info which is more accurate since it’s without the one time gain. Thanks!

4

@Classof2015

ETA…do you currently have another student in college? How did you handle that student’s financial aid application at Emory for this current school year? Did the school award the need based aid without a finalized tax return?

Financial aid for the 2016-2017 school year will be based on your 2015 income. I would very strongly suggest that you NOT file for that extension for the 2015 taxes. You really need to do,the best you can to get those taxes filed ASAP after the new year. I realize you are self employed, but getting those taxes done early this year is the prudent thing to do.

  1. You are self employed. It is very possible that your student's FAFSA will be selected for verification. This will need to be done before ANY financial aid will be disbursed. Verification is sully completed by looking at the filed tax return. Many schools ask you to link to the IRS data retrieval tool to get this done. This usually can't be done until a couple of,weeks after you file. Clearly...October 15 would be too late for your student to get their financial aid in time to start the school year,
  2. Keep in mind that the net price calculators will not be accurate for you. There are deductions allowed for business owners for IRS tax purposes that are not allowed for financial aid purposes. These will be added back in as income for financial aid calculation purposes.
  3. If your student is applying to schools that require the non-custodial parent information, your former spouse will be required to provide it.
  4. Where is the money from that house sale now? If it is in a bank account sitting there....it is considered an asset for FAFSA and Profile purposes and will need to be reported.
  5. Yes, for FAFSA purposes, you won't include your separated spouse...but remember you do need to include any spousal or child support you are receiving.
  6. Yours is a complicated financial situation in terms of schools looking at the info. How are you filing your taxes? If jointly, the school will most definitely request documentation that you are really separated. This could be in the form of a lease someplace for the other parent, or something like that.

But my free advice…please file your taxes as early as possible if you want your student to actually HAVE a final financial aid award before the May 1 date when he has to choose a college.

5

Why do you have a taxable capital gain on your house? Or was this not your personal residence? Or you didn’t satisfy the gain exclusion rules?

6

Are you talking about the CSS profile you are filing soon?

Because the FAFSA for 2016/17 school year will not be available to file until Jan 2016.

For the CSS profile non custodial parent (and spouse if remarried) have to provide their financial info as well.

In January 2016 you can estimate your 2015 income to initially file FAFSA, but like others said you should do your taxes asap to update to actual numbers and verify via the IRS data retrieval tool.