Many mutual funds pay taxable distributions near year-end. Before making a purchase of a fund’s shares, learn its distribution date and delay the purchase until after.
The parents reduced their taxable income by $2,000 by delaying the purchase of mutual funds to until after its distribution date. Since the parents income was assessed at 47% the income reduction may increase the child’s financial aid eligibility by $940 ($2,000 x 47%).
If you are in a financial aid income assessment rate of 47%, you could increase your financial aid eligibility up to $470 for every $1,000 of income reduction by delaying the purchase of mutual funds to until after its distribution date.