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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.
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  3. mshheaddoc

    mshheaddoc Howdy Moderator Emeritus 10+ Year Member

    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

    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

    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.

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