Does my parents financial information get forwarded to the IRS?

<p>So I applied to Cornell and they ask for so much of my parents information. I'm scared to because of the IRS. Will their information be forwarded to them?</p>

<p>It shouldn't matter one way or the other, but ask your parents if there is a potential "problem." Tax forms are more focused on income, gains, dividends and the College Profile and forms are focused to some extent on assets but they reflect each other in some ways.</p>

<p>It is not as much as your parents information will be sent to the IRS, as much as there is now linkage between FAFSA and the IRS (where they can no pull the information directly from the IRS).</p>

<p>Somewhere along the line Cornell will want to verify the information in the FAFSA against what your parents tax returns that they filed with the IRS.</p>

<p>There is a problem. They have assets and owe the irs.</p>

<p>I don't believe the information from the FAFSA gets sent to the IRS. However, it seems hard to believe that the IRS wouldn't already know about all of their assets. The IRS knows about bank accounts because your SSN is required to open accounts. Same for stock accounts.</p>

<p>They know about rental properties if you are claiming any deductions for them, such as for real estate taxes. </p>

<p>I can't think of a lot of assets that you'd report on FAFSA that the IRS wouldn't already be aware of.</p>

<p>My parents own a house. Cornell asks if they own one, and that puts them in danger taking our house away.</p>

<p>If the IRS decides to go after your assets they will go through all your financial data and they will know you have a house.</p>

<p>@lavender - Most people who own houses get a large deduction for paying mortgage interest (at least on their primary residence) and also for the property taxes. It's hard to believe your parents never took these deductions in the past when filing taxes. Are you sure the IRS doesn't know they own it?</p>

<p>Are you concerned about a rental property?</p>

<p>It's not rental property. It's all owned. I don't think they paid taxes.... which is not good.</p>

<p>I think mom3 was asking if it is property that you own but rent out, not whether you rent it.</p>

<p>If the IRS decides to put a lien on your property they will find out about any real estate that you own. It is not something you can hide as it is all a matter of public record. Reporting it to a school is not going to make a difference one way or another.</p>

<p>However, if your parents have not been doing taxes that will cause a problem for financial aid. Schools usually require copies of parents tax returns to verify the financial data you have provided. If you do not provide the tax returns you will probably not receive any aid.</p>

<p>Megmo, real estate tax and mortgage interest deductions aren't something you miss out on if you don't file taxes. For them to have any bearing at all your deductions have to rise above the standard deduction. We own a house but the taxes and mortgage interest (and all our other deductions combined) don't rise above the standard deduction threshold. However, if the OP's parents are paying taxes from the their wages and they are low-ish income, they are likely missing out on some refunds of overpaid taxes.</p>

<p>Lavendar, your parents need to get right with the IRS. If they owe money the IRS will work out a do-able repayment plan. They would be FAR better off doing that than having their wages garnished (which will eventually happen) and your financial aid --assuming you would qualify for need-based aid -- will be screwed up.</p>

<p>The IRS is very unlikely to take your home for back taxes. They do have the authority to do so, but it is a last resort. If your parents are working with them to straighten out the back taxes situation and complying with the repayment plan, they will not take the house.</p>

<p>Also, the FAFSA does not ask about primary homes, only the Profile or a college's own separate financial aid forms do that. If anything is "linked" to the IRS, it's the FAFSA (although as others have said, that's not exactly how it works) -- but certainly the Profile form or Cornell's other forms have nothing to do with the government.</p>

<p>They will very likely want to see your parents' tax returns. If they don't have them because they haven't filed, you're probably going to have to provide all kinds of other financial information as well as have some explanation as to why they haven't filed.</p>

<p>
[quote]
The IRS is very unlikely to take your home for back taxes. They do have the authority to do so, but it is a last resort. If your parents are working with them to straighten out the back taxes situation and complying with the repayment plan, they will not take the house.

[/quote]

Actually this did happen to a family in our town. What made it worse was that they thought they were paying their taxes. He is a dentist and had a crooked accountant that was pocketing their money. The IRS auctioned off their very nice home to pay several years of back taxes. I was surprised at how harsh the IRS was given the circumstances. They didn't take the homes of every victim of the accountant.</p>

<p>they will never be able to pay it back. they dont even have jobs. This is ridiculous and not my fault that I can't attend a school based on my parents financial situation. So hooray for third tier public schools that will give me a full ride.</p>

<p>Yes, that is VERY unusual, swimcatsmom. The IRS really doesn't like taking homes, and usually it's only done when every other avenue has been exhausted. There may be other things going on in the case of the dentist in your town, or it may be that that was just a peculiarly aggressive regional agent/office.</p>

<p>I did read the other day that the actress, Marlee Matlin, is selling her home to pay a $50,000 tax bill, but in that case it's her (and her husband's) choice to resolve the debt that way.</p>

<p>The IRS underwent a big philosophy change a few years back. Kind of a somewhat gentler IRS, but the OP's parents should know they cannot just NEVER deal with their back taxes. The problem when you do that is that the problem just keeps getting worse and worse. It's really just inflicting more pain on yourself not to start that resolution process with the IRS. In fact, if the taxpayer initiates the process, it goes better for them then waiting to get busted... which they eventually will.</p>

<p>Even if they can't pay it, they should still contact the IRS. It will at least get the process rolling and any penalties or fines may at least stop accruing if they're in a process to get some resolution. The IRS can (and often does) forgive some large percentage of back taxes due if the taxpayer is unable to pay but is making an honest effort.</p>

<p>If they refuse to do that, they are not only hurting themselves (and standing a better chance of losing their home), but they are hurting you too.</p>

<p>In the long run, your parents will be happier if they "get right with the IRS" sooner rather than later.</p>

<p>When you've got a problem brewing with the IRS, it's always best to approach them proactively. If you wait until they decide that it's time to deal with you, they're not quite so open-minded.</p>

<p>Well I cannot do anything in regards to that. It's not my problem and I cannot control their actions.</p>

<p>I think the IRS will take your home IF you owe a substantial amount AND you have a LOT of equity in that house. </p>

<p>Probably most people don't owe "that" much and they don't have "that much" equity. That dentist may have had a million dollar home with hundreds of thousands of equity.</p>

<p>I imagine that there is some protection allowance, and after that, the home is up for grabs.</p>

<p>*they will never be able to pay it back. they dont even have jobs. This is ridiculous and not my fault that I can't attend a school based on my parents financial situation. So hooray for third tier public schools that will give me a full ride. *</p>

<p>Well, you're lucky that you have some affordable alternatives. Yes, it's not your fault that your parents let themselves get behind with taxes...taxes are supposed to be withheld while you're employed so you don't get behind once you become unemployed. Are you a senior in high school or a junior? Where will you get the "free ride"?</p>

<p>OP if this is a recent thing (the not filing taxes) they should get squared up. I think you posted earlier your mom doesn't work and your dad is on unemployment and they aren't married. If you were accepted at Cornell as a transfer you need to be talking to the finaid office about all this. They should be able to advise you how it will work out with financial aid and the steps that need to be taken by you. At the very lease they should be able to give you some indication if you will even be able to attend from a financial perspective.</p>