FAFSA business ownership reporting confusion - how to split jointly owned business on application?

Thank you! That makes sense. So we'd each report $35,500 for business net worth (half of the $71,000 total after subtracting loans from assets). Then for income, would we also each report half of the $83,000 profit, or does that get reported differently since we file taxes jointly?

Oh no! That's exactly what I'm worried about. Did you have to submit some kind of correction or appeal to fix it? How did you finally get it resolved?

This is incredibly helpful! We definitely have fewer than 100 employees (it's just us plus 3 part-time workers). So if we qualify for that small business exclusion, we wouldn't report the $71,000 net worth at all? That would make a huge difference for our daughter's aid eligibility.

That's such a relief! Thank you so much for explaining this clearly. I was driving myself crazy trying to figure out the correct way to handle it.

Great question. Rental properties are treated differently from operating businesses on FAFSA. Real estate investments (including rental properties) are reported as investments, not as a business, unless you operate them as a formal business entity with employees. The small business exclusion typically wouldn't apply to simple rental property ownership.

Thanks for the tip! I've been trying to call FSA directly with no luck - just endless holds. I'll check out that service if I need to confirm anything else. Glad to hear from someone who went through the same situation.

Yeah but that small business exclusion is actually a huge benefit for business owners. Most regular families have to report all their assets but business owners with millions in business assets might not have to report any of it if under 100 employees. So it actually can work in our favor.

I hadn't considered that! Thanks for pointing it out. We have 3 part-timers who each work about 20 hours a week, so that would be around 1.5 FTE as you mentioned. Still well below the threshold, thankfully.

FAFSA itself doesn't audit you, but they do have a verification process where they may request additional documentation to confirm information. About 30% of FAFSA applications are selected for verification. It's not technically an audit, but it is a review process where you might need to provide tax documents or other proof. Always be honest on your FAFSA - the penalties for misrepresentation can be serious.

Thank you for breaking it down so clearly! That's extremely helpful. I feel much more confident about how to approach this section now.

Wait, are you sure about this? I'm seeing conflicting information online about whether the small business exclusion was actually eliminated. Some sources still mention it for the 2025-26 FAFSA. Do you have a specific reference or official source that confirms this change? This is such a major difference for small business owners that I want to make absolutely sure before reporting our business assets. Has anyone else here encountered official documentation about this change?

I can help clarify this - you're absolutely right to question this information! The small business exclusion is still in effect for the 2025-26 FAFSA. I just checked the Federal Student Aid website and the current FAFSA completion guide, and businesses with fewer than 100 full-time equivalent employees are still excluded from asset reporting. The confusion might be coming from some of the other FAFSA Simplification changes that have been rolled out over the past couple years, but the small business protection remains intact. Always good to double-check these things since there's been so much misinformation floating around with all the recent FAFSA updates!

I can help clarify this confusion! The small business exclusion is actually still in effect for the 2025-26 FAFSA. I just completed our application last month and the exclusion definitely applied to our family restaurant. The confusion might be coming from all the other FAFSA changes that happened recently, but this particular provision remains unchanged. When you get to the business assets section, there's still a question about the number of employees, and if you indicate fewer than 100 FTE employees, the form automatically excludes those assets from the EFC calculation. I'd recommend double-checking on the official Federal Student Aid website or calling their helpline directly to confirm, but based on my recent experience, the exclusion is still active.

I can confirm that @Fatima Al-Suwaidi is right to question this. The small business exclusion is still in effect for the 2025-26 FAFSA. I just completed ours last month and the form still asks about the number of employees - if under 100 FTE, business assets are excluded. There may have been confusion because there were so many changes to the FAFSA over the past couple years, but this particular provision remains. The official Federal Student Aid website still lists the small business exclusion as current policy. Always double-check with official sources, but don t'panic - the exclusion is still there for qualifying small businesses!

I can confirm that the small business exclusion was indeed eliminated starting with the 2024-25 FAFSA. You can find this information in the official Federal Student Aid handbook and the FAFSA changes documentation on studentaid.gov. The simplified FAFSA removed many of the previous exclusions, including the small business and family farm exclusions that previously applied to businesses with fewer than 100 employees. So yes, all small business owners now need to report the net worth of their business as an asset, regardless of size. This was a significant change that caught many families off guard. I'd recommend double-checking the current year's FAFSA instructions on the official FSA website to be absolutely certain, but this change has definitely been implemented.

This is such crucial information - thank you both for clarifying this major change! I'm honestly shocked that the small business exclusion was eliminated. That's going to have a huge impact on so many families like ours. I really appreciate you confirming this with the official Federal Student Aid guidance. I was about to make a serious error by not reporting our business assets based on the earlier advice in this thread. This really highlights how important it is to always check the most current year's FAFSA instructions, especially with all these recent changes from the FAFSA Simplification Act. Back to calculating our 50/50 split of that $71,000 net worth then! Thanks for saving me from a potentially costly mistake.

Hi Vera! Welcome to the community - I totally understand feeling overwhelmed by all the conflicting information here. For the most current and official guidance on 2025-26 FAFSA business reporting, I'd recommend checking the Federal Student Aid website directly at studentaid.gov and looking for their "Completing the FAFSA" resources. You can also access the official FAFSA help documentation through your FSA ID account when you start filling out the form. Given the recent changes that were discussed in this thread (like the elimination of the small business exclusion), it's definitely smart to go straight to the official source rather than relying on advice that might be from previous years. The FSA website should have the most up-to-date information about whether and how to report business assets for the current application cycle. Good luck with your food truck business reporting!

Hi and welcome to the community! I'm also new here but have been following this thread closely since I'm in a similar situation with my family's small business. From what I've gathered, the best approach is definitely to go directly to the Federal Student Aid website (studentaid.gov) for the most current guidance, especially given all the recent FAFSA changes that people have mentioned. You can also try calling the FSA Information Center at 1-800-4-FED-AID (1-800-433-3243) to get official confirmation about business reporting requirements. Several people in this thread mentioned using services like Claimyr to get through to FSA representatives faster if the regular phone lines have long wait times. Given the confusion about whether the small business exclusion still applies or not, it's definitely worth getting official clarification before submitting. The 50/50 ownership split approach seems to be the consistent advice throughout this discussion, but confirming the current asset reporting requirements is crucial. Good luck with your auto repair shop reporting!

Welcome to the community! I'm also new here and found myself in almost the identical situation with my husband regarding our small family restaurant. This thread has been absolutely invaluable - I was initially planning to follow some of the earlier advice about the small business exclusion until Heather and Oscar clarified that it was eliminated. It's really concerning how these major FAFSA changes weren't better communicated to small business families. I ended up calling the FSA directly using the number mentioned earlier (1-800-433-3243) and was able to confirm that we do need to report our business net worth split 50/50 between us as co-owners. The representative I spoke with also emphasized checking the official studentaid.gov site for the most current guidance since there have been so many recent updates. Thanks to everyone in this thread for sharing their experiences - it's made navigating this whole process so much less stressful knowing we're not alone in dealing with these complexities!

Hi Aisha! Welcome to the community - I'm also new here and completely understand your shock about the small business exclusion elimination. It's been such an eye-opening thread! I'm in a similar boat with my partner and our small graphic design business. What really helped me was calling the FSA directly after reading about it here - they confirmed that yes, we need to report our business assets now regardless of employee count. It's frustrating that such a major change wasn't publicized better, but at least this community caught it before we made costly mistakes on our applications. The 50/50 split approach definitely seems to be the way to go for jointly owned businesses. Thanks for reinforcing the importance of checking current official guidance - this thread has been a real wake-up call about staying on top of these policy changes!