SDN members see fewer ads and full resolution images. Join our non-profit community!

FAFSA rant about short term capital gains

Discussion in 'Financial Aid' started by Doctor Bagel, Mar 5, 2007.

  1. Doctor Bagel

    Doctor Bagel so cheap and juicy Moderator Emeritus 10+ Year Member

    So I got minorly screwed on the last FAFSA. Last year, I made about $300 in short term capital gains. Because they were short term capital gains, I'm apparently not eligible for file a 1040A or EZ form, even though our income was well within the guidelines for those forms. Anyway, because of these stupid capital gains, I had to answer on the FAFSA that I wasn't eligible to file using the A or EZ forms. What this means is that they considered our assets in my EFC even though our income was below the cutoff for including assets. In reality, it doesn't make much of a difference since we don't have many assets, but I just think it sucks that earning $300 in ST capital gains could have a noticeable effect on my EFC.
     
  2. SDN Members don't see this ad. About the ads.
  3. mshheaddoc

    mshheaddoc Howdy Moderator Emeritus 10+ Year Member

    43,160
    74
    Apr 24, 2002
    Wild west of Mistytown
    That does suck and thanks for the heads up. I was considering using stock for a purchase and although I didn't think about it I'm glad that I didn't. I didn't know that with ST gains you couldn't use a 1040EZ, I mean that's kinda stupid. It should be based on income ... if I remember correctly you can still fill out that section. Although I have always used turbo tax since I wasn't complicated tax wise ....

    I still have to file even though we had zero income. I'm tempted to just say forget it but part of me always worries ....
     
  4. TMP-SMX

    TMP-SMX Senior Member Moderator Emeritus 10+ Year Member

    3,497
    26
    Jun 12, 2006
    Good tip... Speaking of the FAFSA. I filed my taxes online and I said that I filled out a 1040 when it was actually a 1040EZ because it wasn't specified on the form I was filling out. I did say that I was eligible for the A or EZ so it doesn't make any difference correct (In other words no reason to correct it on the FAFSA unless my parents have a significant difference in income on their taxes they are finishing up).
     
  5. Doctor Bagel

    Doctor Bagel so cheap and juicy Moderator Emeritus 10+ Year Member

    Yeah, I think as long as you're eligible for the 1040A or EZ, you're treated as if you completed it that way. Also, the FAFSA said that if you couldn't use the A or EZ form just because of deductions for educational expenses, then you could still answer yes for the question about whether you could use the A or EZ form. No break for the short term capital gains, though. :mad:
     
  6. Sol Rosenberg

    Sol Rosenberg Long Live the New Flesh! 10+ Year Member

    3,534
    6
    Feb 11, 2006
    Living in America
    I know it's too late for you now, DB, but I think this is a quasi-legal way to get around this: If you know that you will have capital gains, can you accumulate some losses to offset them? (Totally Legal.) Now the quasi-legal part. Instead of filing a Schedule D which has the capital gain and loss, just "forget" to file the Schedule D, and file your 1040EZ not including your gain + loss. If you ever get audited, there will be no penalty and/or interest because although your tax form was filled out improperly, penalties/interest are assessed based upon the amount of tax you underpaid ($0 in this case.)

    Or, you could just not sell your stock/whatever generated the capital gain.

    That really sucks that the specific tax form that you file influences your aid. I'm totally screwed since I file a Schedule A, C, D, and E.
     

Share This Page