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

For FAFSA, you report business assets according to ownership percentage. Since you jointly own it 50/50 with your husband, each of you would report 50% of the net worth. So yes, split it in half on the parent sections. Just make sure that when you list the value, you're only counting your business's net worth (assets minus liabilities) and not including the income portion there - income goes in a different section.

we had the EXACT same problem last yr!!!! The fasfa ppl counted our business TWICE becuz me and my husband both put 100% of it! screwed up our SAI score and took 3 months to fix. DONT DO THAT

This is a common confusion point with FAFSA. Here's the correct approach for jointly owned businesses: 1. For business net worth: Each parent reports their ownership percentage. In your case, 50% each. 2. For business income: This follows your tax return. Since you file jointly, the income is already properly allocated on your tax forms that get transferred to FAFSA via the IRS Data Retrieval Tool (if you're using it). One important note: If your business has fewer than 100 full-time equivalent employees, you may qualify for the small business exclusion, which means you wouldn't need to report the business assets at all - only the income. This is a significant protection for small business owners on the FAFSA.

Yes, that's correct! With fewer than 100 employees, your business assets should be excluded from the FAFSA calculation under the small business protection. You'll still report the income from the business (the $83,000 profit), but not the net worth of inventory, equipment, etc. When you complete that section, there should be a question asking about the number of employees. Once you indicate it's under 100, the form should automatically exclude those assets from the calculation.

wait im confused about something else with this... does anyone know if this small business thing applies to rental properties too? my parents have 5 rental units they manage together

Just to add a data point - we went through this exact scenario last year. We have a family restaurant with 12 employees that we co-own 50/50. When I called FSA to confirm how to report it, they kept transferring me and putting me on hold for HOURS. I finally got through using Claimyr (claimyr.com) - they got me connected to a FAFSA agent in about 12 minutes. The agent confirmed we qualified for the small business exclusion and didn't need to report the business assets. You can check out how it works in their video demo: https://youtu.be/TbC8dZQWYNQ. Saved me tons of stress!

FAFSA is SUCH a pain for small business owners!!! The government literally punishes us for being entrepreneurs instead of W-2 employees. My daughter got WAY less aid than her friends whose parents make the same income but work corporate jobs. The whole system is rigged against small business owners!!!!!

Just a quick tip from someone who's been through this: when you're using the small business exclusion, make sure you answer the employee question correctly. The FAFSA specifically asks for the number of "full-time equivalent" employees, not just the raw number. So your 3 part-time workers might actually count as 1.5 FTE employees. Still well under 100, but something to be aware of!

my cousins friend said they got audited becuz they didn't report business stuff right on fafsa..... is that a real thing?? can fafsa audit you?

I work at a financial aid office - here's a simplified approach for business owners: 1) If business has <100 employees = don't report business assets 2) If business has 100+ employees = report your ownership % of net worth 3) Income always gets reported regardless. Hope that helps!

As someone who just went through this process last year, I can confirm what others have said about the small business exclusion - it's a game changer! We own a small manufacturing business (just my spouse and I plus 4 part-time employees) and initially panicked about reporting our equipment and inventory worth. But once we realized we qualified for the exclusion, it simplified everything tremendously. The key is being accurate about your employee count using full-time equivalents. Also, keep good records of everything in case you get selected for verification - having organized documentation made that process much smoother when it happened to us. Don't stress too much, you've got this!

For our small family business, we actually ended up getting selected for verification too. The business-related documents they requested were pretty standard - they wanted our business tax returns (1120S since we're an S-corp), a statement showing the business's net worth calculation, and documentation of our ownership percentage. Since we qualified for the small business exclusion, we didn't need to provide detailed asset valuations or anything complex like that. The whole verification process took about 3 weeks once we submitted everything. My advice is to keep your business tax returns handy and maybe prepare a simple one-page summary showing your ownership stake and employee count - that covers most of what they'd need if you get selected.

I'm new to this community but going through the same exact situation right now! Reading through everyone's responses has been incredibly helpful. We own a small bakery (LLC) with just me, my wife, and 2 part-time employees, so it sounds like we'll qualify for that small business exclusion too. I was initially planning to split everything 50/50 between us on the FAFSA, but now I understand we might not need to report the business assets at all. Just wanted to say thanks to everyone who shared their experiences - this thread is a goldmine of practical advice for small business owners navigating FAFSA! Definitely bookmarking this for reference when we fill out our forms next week.

I'm going through this exact same situation right now with my spouse! We own a small consulting firm together and I was completely lost on how to handle the business reporting. Reading through all these responses has been such a relief - especially learning about the small business exclusion. We have 6 part-time contractors who work with us, so I need to calculate the FTE to make sure we're under 100 (which we definitely are). It's so helpful to see real examples from other business owners who've successfully navigated this process. Thanks everyone for sharing your experiences and making this so much less overwhelming!

People keep referencing this small business exclusion for small businesses with less than 100 FTEs. This is outdated. It ended with the 24-25 FAFSA. On the revised FAFSA, the net worth of any small business or family farm is reported as an asset on the FAFSA.

I can confirm that the small business exclusion was indeed eliminated starting with the 2024-25 FAFSA as part of the FAFSA Simplification Act changes. This is a huge shift that caught many families off guard. Now ALL business owners must report the net worth of their business as an asset, regardless of the number of employees. So for your situation, you would need to report 50% of your business net worth ($35,500 each) as Heather mentioned. The Federal Student Aid website has updated guidance confirming this change. It's definitely worth double-checking the current year's instructions since there have been so many FAFSA changes recently, but yes - the small business protection is gone.

This thread has been incredibly eye-opening! I'm a newcomer here but dealing with the exact same situation - my spouse and I own a small landscaping business together and I was completely overwhelmed trying to figure out the FAFSA reporting. I'm really grateful that Heather and Oscar clarified the elimination of the small business exclusion - I was about to make the same mistake based on the earlier advice. It's frustrating that such a major change wasn't more widely publicized, but at least now I know we need to report our business net worth split 50/50. For anyone else reading this thread, definitely double-check the current year's official FAFSA instructions since it sounds like there have been significant changes recently. Thanks to everyone who shared their experiences - this community is such a valuable resource for navigating these complex financial aid requirements!

Hi everyone! I'm new to this community and going through the exact same confusion with my husband regarding our jointly-owned food truck business. After reading through this entire thread, I'm honestly feeling a bit whiplashed by all the conflicting information about the small business exclusion! It sounds like there have been major changes that weren't well communicated. Can someone point me toward the most current, official source for 2025-26 FAFSA business reporting requirements? I want to make absolutely sure I'm following the right guidance before we submit our application. We have about $45,000 in business net worth and I definitely don't want to mess up our son's financial aid by reporting incorrectly. This thread has been incredibly helpful for understanding the 50/50 ownership split approach, but I want to triple-check the current rules about whether business assets need to be reported at all. Thanks in advance for any guidance!