Accumulated Assets in C-Corps

Owners of regular C corporations face double taxation. The company’s profits are subject to the corporate income tax. 

If some of those profits are paid to the owner and other shareholders, as nondeductible dividends, the same dollars will be taxed again, on the recipients’ personal tax returns.

    

Double taxation might not have been a major concern when the highest tax rate on qualified dividends was only 15%, as it had been for most of this century. However, recent legislation boosted the dividend tax rate to 20% for some taxpayers; high-income taxpayers also may owe the 3.8% Medicare surtax as well as some indirect taxes on dividends they receive. Therefore, business owners may prefer to retain earnings in the company, rather than pay out double taxed dividends.

     

Example 1:

Craig Taylor owns 100% of CT Corp. The company’s profits this year are $400,000, on which CT Corp. pays income tax. Rather than pay himself a dividend, which would be taxed at an effective rate of 25% in this scenario, counting all the various taxes that would be triggered, Craig decides to keep the money inside CT Corp.

Cash crunch

However, CT Corp. might run into a tax problem: the accumulated earnings tax (AET).

Retained earnings over $250,000 are subject to this tax ($150,000 for personal service corporations, such as professional practices). Thus, if CT Corp. had $200,000 in retained earnings from prior years, this year’s $400,000 makes the total $600,000, which is $350,000 over the $250,000 limit. CT Corp. would owe tax on the $350,000 overage: $70,000, at the current 20% AET rate.

     

In practice, the AET is not a certainty. The IRS might investigate when CT Corp. reports retained earnings over $250,000 on its corporate income tax return, but it’s possible that it won’t owe the AET, if the company has a good reason for the large accumulation.

Forward thinking

Earnings in excess of $250,000 will be permitted if the company can show that it had a reasonable need for holding onto cash and other liquid assets. That need could be to provide funding for a specific plan related to the company’s business, such as buying expensive equipment or expanding into a new territory.

Solid proof

In order to retain earnings over $250,000, yet avoid the AET, a corporation must be able to show that there really was a plan in place to use the money, and that the reasons for the retention go beyond tax avoidance. Ideally, corporate minutes or other documentation, such as emails, will include a discussion of, for example, the company’s intent to upgrade its information technology with an expensive new system.

    

No matter how well you can show that a plan was in place as a reason for accumulating excess assets, you’ll also need to show that the plan has since been executed, or is in some stage of progress.

 What’s more, court decisions have approved the concept that C corporations can cite working capital as a reason for accumulating earnings over $250,000. Our office can help you determine an acceptable level of working capital for your company, which might raise its permissible level of accumulated earnings.

Simple solution

Regardless of your needs for working capital, there are basic steps you can take to avoid or limit the AET. For instance, you can pay some dividends to shareholders each year, even if that generates double taxation. A company that retains excess earnings while never paying out dividends may be especially vulnerable to IRS scrutiny and assessment of the AET.

    

Longevity Annuities

Deferred income annuities (DIAs) recently have become popular. New regulations from the U.S. Treasury Department may increase their appeal, opening the way for so-called “longevity” annuities inside IRAs and employer retirement plans.

Later rather than sooner

With a DIA, you pay an insurance company now in return for a predetermined amount of cash flow in the future.

            

Example 1:

Grace Palmer is age 55, planning to retire at 65. She buys an income annuity now for $100,000. Depending on the specific features Grace requests, if she starts to receive payments immediately, she might get around $400 a month ($4,800 a year) as long as she lives.

           

Instead, Grace agrees to wait until she retires at 65 to start payments. In return for giving up her money for 10 years, with no return, Grace might get lifelong annual payouts of $800 a month. (Exact amounts will depend on the contract terms and the annuity issuer.)

Even later

Certain DIAs are known as longevity annuities. They begin paying out late in life, so they appeal to people who are concerned about running short of money if they live into their late 80s or 90s or beyond.

            

Example 2: 

Instead of starting her DIA payouts at 65, Grace asks for them to begin at 75 or later. Such a delay could increase her payouts to $2,000 a month or more, as her remaining life expectancy would be limited. Grace enters into this arrangement to assure herself that she’ll have substantial cash flow if she lives until an advanced age.

Solving the distribution dilemma

Until recently, such longevity annuities were impractical for retirement accounts because required minimum distributions (RMDs) typically start after age 70½. Seniors would have to take RMDs on the annuity value even though no cash would be coming from the annuity.

            

Example 3: 

Suppose Henry Adams had bought a longevity annuity inside his IRA to begin payments at age 80. At age 70½, when Henry has $500,000 in his IRA, the annuity issuer values the contract at $100,000. Under prior rules, Henry would have had to take RMDs based on a $500,000 value even though he had only $400,000 currently available. Henry would have been required to withdraw (and pay tax on) a relatively large amount, even if he doesn’t need all the money he’ll withdraw.

This unfavorable tax treatment would continue, year after year, as long as Henry waited for his longevity annuity. Thus, longevity annuities were not attractive for retirement accounts and few people bought them in their IRA.

This situation is about to change. In July 2014, the Treasury Department issued final regulations on qualified longevity annuity contracts (QLACs). If annuities meet certain conditions, they will be considered QLACs. That way, the account value won’t count for RMD calculations.

Pros and cons

Some insurance companies are working on QLACs that are expected to appear in 2015. QLACs might appeal to seniors who are likely to live well beyond normal life expectancy and who are concerned about running short of money. In addition, individuals who would like to trim their RMDs and, thus, leave more to heirs, may consider buying QLACs. The regulations permit QLACs to have a return of premium feature, which would pay beneficiaries the amount invested yet not paid out in annuity payments by the time the annuity purchaser dies.

            

On the downside, QLACs will not be permitted to have any liquidity features for the buyer. If a taxpayer invests $100,000 in a QLAC, all she can get in return will be her annuity payments.

Rules for QLACs

·         No more than 25% of an individual’s total IRA money can be invested in qualified longevity contracts (QLACs).

·         For this purpose, SEP IRAs and SIMPLE IRAs are included. Roth IRAs don’t count because there is no reason to hold a QLAC in a Roth IRA, where the owner never has required minimum distributions. 

·         The 25% limit also applies to each employer plan.

·         Counting all QLACs in all plans, an investor cannot invest more than $125,000. That ceiling will increase with inflation.

·         QLAC payouts must begin no later than age 85, although they can begin earlier.

ACA & You: 3 Things To Know When Filing

1. Did you have health insurance through your employer, Medicare, Medicaid, or a plan you bought outside of the Marketplace?

 If you answer "yes", stop right here.
 We will check the required box on your federal income tax return and be done.

https://www.healthcare.gov/taxes/other-health-coverage/

2. Did you have health insurance through the Health Insurance Marketplace?

If you answer "yes", you will be receiving a Form 1095-A in the mail by early February. This will be needed in order to complete & file your federal income tax return. 

Some of those who bought health insurance under the ACA received advance tax credits. These were tied to their income to help with the monthly premiums.  

https://www.healthcare.gov/taxes/marketplace-health-plan/

The information from 1095-A will be needed in order to complete Form 8962, which will be a new form on your tax return.

Federal officials will check the taxpayer's actual income against their original estimated income when they applied for the subsidies. 

• If you TOOK LESS advance payments of the premium tax credit than the actual credit you’re eligible for: You’ll get the difference as a credit on your tax return.
• If you TOOK MORE advance payments of the premium tax credit than the actual credit you’re eligible for: You may need to pay the difference with your tax return.
• If you DIDN’T TAKE ANY advance payments of the premium tax credit during 2014: When you complete Form 8962 you may find out that you qualify for a credit. If you do, you can claim it when you file your taxes.

3. If you didn't have any health insurance coverage for 3 months or more in 2014, one of the following will apply to you:

• You will qualify for a health coverage exemption
• OR you will pay a fee when you file your 2014 federal income tax return

The penalty for being uninsured in 2014 is either:

•  $95 per adult (with a family maximum of $285)
• OR 1% of household income, whichever is greater.

The penalty for being uninsured in 2015 will be:

• $325 per person
• OR 2% of household income

https://www.healthcare.gov/taxes/no-health-coverage/

Planning for Retirement

Save substantially. Invest your savings wisely. The conventional wisdom holds that this is the way to accumulate a nest egg for your retirement, and the conventional wisdom is right on the money.

            

However, you probably won’t always have earnings to invest. At some point, your work income is likely to cease or drop sharply in retirement, and you’ll need to draw down prior savings. Yet, studies have found that very few people have considered how they’ll go from investing earned income to generating retirement income. 

The sooner you give this issue serious thought, the more likely you’ll be prepared with a realistic spending plan when the paychecks stop. Here are a few options to consider.

Spend income, not principal

Most people can rely upon Social Security benefits for some retirement income. Beyond Social Security, you probably will have to tap your own savings. The question, then, is how to go about drawing down the money you’ll spend. One method is to use only dividends and investment interest income for cash flow.

     

Example 1: Suppose Ed and Nancy Parker will each receive $20,000 a year from Social Security, so their joint annual benefits will be $40,000 per year, indexed for inflation. The Parkers have a $600,000 portfolio, in this example, invested in high-quality stocks and bonds. If their interest income and dividends average 2.5%, the Parkers will receive another $15,000 a year (2.5% of $600,000). By spending that $15,000 but leaving their stocks and bonds intact, the Parkers’ retirement income will be $55,000 a year, including $40,000 from Social Security.

Cracking your nest egg

Dividends and investment interest yields are low today, and may remain low in the future. The Parkers, in our previous example, may wish for greater retirement income than $55,000 a year. One alternate strategy is to follow the so-called 4% rule, which has been developed by financial advisors and academic researchers.

      

Example 2: The Parkers withdraw 4% of their $600,000 investment portfolio ($24,000) in the first year after they stop working. Now they have $64,000 ($40,000 from Social Security plus $24,000 from their portfolio) to spend rather than $55,000.

      The 4% rule assumes that the Parkers increase their withdrawals each year to keep up with inflation. Going by historic investment results, research indicates a high probability that the Parkers’ portfolio will last at least 30 years, with this method.

      To get that $24,000 in the first year of retirement, the Parkers might spend their $15,000 of investment income, as explained, and sell $9,000 of their investments to raise the rest of their cash. Over time, they would gradually deplete their portfolio in this manner.

      The 4% rule likely will provide more retirement income than just spending interest and dividends. However, active management will be involved—deciding which assets will be sold each year to provide the cash flow. In addition, the Parkers run the risk that poor results in the stock or bond market will accelerate portfolio depletion.

Assessing annuities

Yet another approach is to put retirement funds in an immediate annuity, sometimes called an income or a payout annuity. You can give a lump sum to an insurance company and receive monthly income for the rest of your life. Joint annuities are available, so a married couple might get this payout as long as either spouse is alive.

      

Example 3: The Parkers, both age 65,  weigh putting all of their $600,000 into a joint annuity. By using an online annuity calculator, they learn that such an annuity might pay them $3,000 a month, or $36,000 a year. If one spouse dies, the survivor will continue to get that $36,000 a year.

      Now the Parkers will start retirement with $76,000 of income in the first year, with $36,000 from the annuity plus $40,000 from Social Security. The annuity will protect them from running short of money over a long retirement. They won’t have to make decisions about selling securities, and they’ll enjoy some tax benefits because most of their annuity payments will be treated as a tax-free return of principal for many years, if held in a taxable account.

      On the other hand, annuities typically provide a fixed payment. The $36,000 the Parkers receive in 2015 won’t buy as much in 2025 or 2035, assuming inflation drives prices higher. Depending on the terms of the contract, a joint annuity may not leave anything to their children, even if the Parkers both die in a few years. Buying an annuity today, while interest rates are at historic lows, also will lock in a relatively low return, which might be surpassed by stocks and bonds over the coming decades.

Mix and match

The bottom line is that no method is absolutely better than the others. Some advisors suggest putting some retirement funds into an immediate annuity, for dependable lifetime income, while continuing to manage other assets under a withdrawal plan, such as the 4% rule. Other sources of income also might be considered: an inheritance, selling your home, using a reverse mortgage, even doing some part-time work.

     By planning ahead you will have a better idea of how much cash you reasonably can expect to receive and where it will come from, so you can set your retirement expectations realistically.

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As Collectibles Boom, Selling Can Be Taxing

In the past two years, five paintings have been sold at auction for more than $100 million apiece, while another (by Cezanne) reportedly brought more than $250 million in a private sale. In the same time frame, a pink diamond was auctioned for a record $83 million.

            As you can see, the collectibles market has been booming. You might not own a multimillion dollar item, but the chances are that the coins, stamps, or paperweights that you collect have grown in value. If you decide to cash in by selling one or more pieces from your collection, you may have to deal with unpleasant tax surprises.

Raising the rates

The tax code has special treatment for collectibles, which can include artwork, rugs, antiques, gems, stamps, metals, coins, and alcoholic beverages, according to the IRS. When you sell collectibles, the special 0%, 15%, and 20% tax rates on long-term capital gains don’t apply. Instead, you’ll owe tax at your ordinary tax rate, with a cap of 28%.

            As is the case with all assets, short-term capital gains on the sale of collectibles are taxed at ordinary rates.

            Example 1: Dan King bought a rare U.S. coin for $1,000 and sold it 11 months later for $1,300. Dan’s $300 gain was short-term, so he owes tax at his ordinary rate, 15% in this example.

            Dan bought another coin at the same price at the same time; he sold that coin for a $300 gain as well. This coin, though, was sold 13 months after Dan’s purchase. Because the holding period was over one year, Dan reports the $300 as a long-term capital gain.

            Normally, a long-term capital gain is taxed at a 0% rate by taxpayers in the 15% tax bracket, such as Dan. That would be the case, for example, if Dan had a $300 long-term gain on a stock sale. A long-term collectibles gain, though, doesn’t qualify for the 0% rate. Thus, Dan will owe 15% in tax on this $300 gain ($45) from the second coin sale, just as he does on the first (short-term) coin sale.

            Similarly, taxpayers in the next higher tax brackets (25% and 28%) also owe tax at their ordinary rate on long-term gains from collectibles. Taxpayers in higher brackets (33%, 35% and 39.6%) do get some tax break from long-term gains on collectibles because the rate does not exceed 28%.

            Example 2: Emily Larsen has taxable income over $500,000, so she is in the top 39.6% tax bracket this year. She sells a painting for a $20,000 gain after holding the artwork for several years. On long-term gains from a stock, Emily would owe tax at the special 20% rate. However, Emily doesn’t qualify for the 20% tax rate on the sale of the painting because it is a collectible. Emily’s tax rate is higher than 28%, so she will owe the maximum 28% rate on her $20,000 long-term collectibles gain: $5,600 in tax.

Personal use

                                                                             

If you plan to sell collectibles at a loss, be aware that the tax code still works against you. If you sell collectibles for which you had “personal use,” you can’t claim a capital loss, and selling collectibles for which you had personal use at a profit will still result in a taxable capital gain.

      Personal use will depend upon specific circumstances. Hanging a painting on the wall of your home might be considered personal use, depriving you of any tax benefit from a loss on a subsequent sale. However, if you regularly buy a specific type of painting, keep some in careful storage when not on display, and maintain careful records of your collection, you might be able to make the case that the artworks were held for investment purposes. Such efforts could result in a capital loss that provides tax benefits. Our office can help you determine if your collectibles may be treated as investment property.

Collecting Net Investment Income Tax

·       Some taxpayers owe a 3.8% surtax, commonly called the net investment income tax, to help finance Medicare.

·       This net investment income tax may be imposed if you report modified adjusted gross income (MAGI) over $200,000, or over $250,000 on a joint tax return.

·       Your net investment income tax amount will depend on your MAGI and your net investment income.

·       If you owe the net investment income tax, that may effectively increase the tax you owe on sales of collectibles: the maximum tax on a long-term gain could rise from 28% to 31.8%.

(3)_FAFSA- Grandparent Aid for College Costs

Many grandparents would like to help their grandchildren with the steep costs of higher education. That’s often a laudable goal, but some methods of providing this assistance might be more effective than other tactics.

Grand gifts

The simplest tactic is to give money to youngsters before or during their college years. In 2014, the annual gift tax exclusion is $14,000 per recipient.

            Example 1:
Cora Smith has three grandchildren. She can give each of them $14,000 this year for their college funds. Cora’s husband, Rob, can make identical gifts to each of their grandchildren. Such gifts will have no adverse tax consequences. (Larger gifts may reduce this couple’s gift tax exemption and, ultimately, their estate tax exemption.)

In addition to all of these $14,000 gifts, the Smiths can pay the college tuition for any of their grandchildren. No matter how large these outlays might be, Cora and Rob will not owe any tax or suffer any reduction in their transfer tax breaks.

Axing aid

Such grandparent gifts may have their disadvantages, though. They could result in reduced financial aid.

            Example 2: 
Over the years, Rob and Cora have made gifts to their grandson Doug. Counting investment buildup, Doug has $50,000 worth of assets when he fills out the FAFSA (see our article “Financial Aid Starts With the FAFSA”) for his first year of college. The FAFSA assesses Doug’s assets by 20%, when calculating the expected family contribution (EFC), so the $50,000 could reduce his financial aid by $10,000: the 20% assessment times $50,000 of Doug’s assets. Tuition payments by Rob and Cora for Doug’s schooling could result in even larger aid cutbacks.

For some grandparents, this won’t be a major concern. The student’s immediate family might have such extensive assets and such substantial income that need-based financial aid won’t be possible. However, today’s college costs are so high that aid might be available, even to well-off families. The possible impact on financial aid should be discussed with the student’s parents.

In addition, it should be considered that assets given to grandchildren will come under the youngsters’ control once they come of age, usually on or before age 21. Grandparents need to be comfortable with the idea that money in a grandchild’s account may or may not be used for education or other worthwhile purposes.

Grandparents to parents

Instead of making gifts directly to grandchildren, grandparents can give assets to their own children who are the student’s parents. This plan will have less impact on financial aid.

            Example 3:
Assume that Cora and Rob have made gifts to their daughter Elly, Doug’s mother, rather than making gifts directly to Doug. Such gifts have increased Elly’s assets by $50,000. A parent’s assets are assessed at no more than 5.64%, on the FAFSA, so the additional assets held in Elly’s name would reduce possible aid by $2,820: 5.64% of $50,000.

Therefore, giving money to the student’s parent would be better than giving money to the student, if financial aid is a concern, and, assuming the parents are more financially prudent, less chance exists of the transferred assets being squandered.

Focusing on 529 plans

If concerns about the security and intent of the gifted funds still exist, they may be addressed by contributing to a 529 college savings plan, instead. Such plans have many advantages.

            Example 4: 
Cora Smith creates three 529 accounts, naming a different grandchild as the beneficiary for each one. Now Cora has control over how the money will be invested and how it will be spent. Any investment earnings will be tax-free and distributions also will be untaxed if the money is used for the beneficiary’s college bills. Cora can even reclaim the funds in the 529 if she needs money, paying tax and (with some exceptions) a 10% penalty on any earnings.
What’s more, a 529 account owned by a grandparent won’t be reported on the grandchild’s FAFSA, so it will not have any initial impact on financial aid. It’s true that eventual distributions from a grandparent’s 529 will be reported on a subsequent FAFSA and will substantially reduce financial aid. That won’t be a concern for families who are not receiving need-based aid. If the student is receiving aid, distributions from the grandparent’s 529 plan can be postponed until the last FAFSA has been filed.

            Example 5:
Doug Franklin will start college in the 2015-2016 school year, so he files his first FAFSA in January 2015. Doug receives some need-based aid, so his grandmother Cora lets the 529 account continue to grow, untaxed. Doug files a new FAFSA every year until January 2018, when he submits the form for his senior year. Subsequently, Cora can tap the 529 account to pay Doug’s remaining college bills. Doug won’t be filing any more FAFSAs for financial aid, so Cora’s 529 distributions won’t be reported.

The bottom line is that grandparents have many tactics they can consider if they wish to give grandchildren a financial assist on the path towards a college degree.

(2)_Why You Need Us for Filing Out FAFSA

FAFSA or Free Application for Federal Student Aid, is a tedious and mind-numbing application that must be filled out in order to get a chance at financial aid for college.

We get phone calls and e-mails when folks hit question 85.  Well, let me take that back. Most folks can answer question 85, it is everything AFTER that where things get a bit murky (and the despair sets in).  For good reason, these questions read like the tax code:

Questions 88 and 89 ask about earnings... this information may be on the w-2 forms, or on IRS form 1040- lines 7+12+18+Box 14 (Code A) of IRS schedule K-1 (Form 1065); on 1040A-line7; or 1040EZ-line 1

I took that verbatim from a FAFSA application I printed off the internet.  We are not saying a normal person can't fill this out, we are just saying the government didn't make this thing very "intuitive". When it comes to filling out a federal application that will affect your child's future, we just want to be sure.  No one wants to be accused of submitting fraudulent information.

That being said, here are a few things we'd like to offer to help you get through this process as fast as humanly possible.

1. Deadlines, deadlines, deadlines
First things first, this thing is due June 30 at the end of each academic year. For example, the deadline to submit your FAFSA application for the 2014-15 school year would be June 30th, 2015.

  But, funds are on a first-come, first-serve basis so you want to request assistance as soon as you can after the first of the year.  **You can submit your FAFSA using estimated tax information, but you must correct it right after you file your return.

**Make sure to click on the "State Aid Deadlines" link at FAFSA website for information on the deadlines in your state.

2. IRS Data Retrieval Tool
Do not reinvent the wheel, especially if you don't have to.  Use this (if you don't fall into one of the five exceptions below).  This is the easiest way to complete or correct your FAFSA with accurate tax information.  You can view and transfer your tax info directly into the FAFSA!

Here are some cases where you will not be able to use this feature: 

1. Students or parents who are married and file as Married Filing Separately
2. Students or parents who are married and file as Head of Household
3. Students or parents filed an amended tax return
4. Students or parents filed a foreign tax return
5. Students or parents filed their tax returns electronically within the last 3 weeks or through the mail withing the last 11 weeks.

3. Who is My "Parent"/ Marital Status of Parents
Don't chuckle, this one trips a lot of folks up.  Read the remainder of Item 3 as if you were the applying student.

Parent, according to FAFSA, is your legal (biological and/or adoptive) parent or stepparent.

• If your parents are divorced or separated and DON'T live together, answer the questions about the parent with whom YOU LIVED MOST during the past 12 months.
• If you lived the same amount of time with each parent, give answers about the parent who provided MORE FINANCIAL SUPPORT during the past 12 months. (In a situation where the parents split all costs it will generally default to the parent with the greater income).
• If you have a stepparent who is married to the legal parent whose information you're reporting, you must provide that stepparent's information.  (If your father and step-mother are the ones on the return, they are your "parents" for this application)
• FAFSA asks about "Your Parents'" information. Again, since you are using ONE tax return, you will use the people on the tax return as your "Parents". 
• The only exception to the above is when FAFSA asks about your parents' education level. For this question your parents are considered your birth parents or adoptive parents. 

4. What you need
They say that as long as you have your tax return you can answer these questions... sort of, but not really.  

You should also have at the ready:

1. All Forms W-2 used on the tax return. 
2. Current cash on hand, and balances in all savings and checking accounts.  
3. Your total investments, including real estate... but don't include the home you live in.  
4. The net worth of your business(es). 
5. A total of all child support paid AND/OR received because of legal requirement.

5. Tips when answering questions 85-94 on FAFSA

• #85 is your AGI.  Line 37 on Form 1040.  
• #86 Enter your parents' income tax.  Line 55 on Form 1040  
• #87 Enter your parents' exemptions. Line 6d on Form 1040
• #88 How much did Parent 1 & Parent 2 earn.  This is where they throw you for a loop.  They want to know how much EACH parent earned.  
• Not each biological parent.  
• Not just the one parent who shares DNA with the applying student.  
• They want the amount earned by the 2 individuals on the tax return you are using.  There is no "line" for this separated wage information on a joint tax return. The best thing to do here is to use the wage information from the parent's/parents' W-2. 
• #90 Add up the current balance of cash, savings and checking accounts.
• #91 Net worth of your parents' investments, including real estate... but not the house you live in.  (NET WORTH= CURRENT VALUE less DEBT. If you net worth is negative, enter 0.)
• Investments include- (*Investment value = current balance or market value of these investments as of today.  Investment debt means only those debts that are related to the investments.)
• Real estate - raw land
• Rental property
• Trust funds
• UGMA & UTMA accounts
• Money Market, Mutual Funds, Certificates of Deposit, Stock, Stock Options, Bonds, Other Securities
• Installment and land sale contracts (including mortgages held)
• Commodities
• Qualified educations benefits or education savings accounts
• For a student who must report parental information, the accounts are reported as parental investments in #91, INCLUDING all accounts owned by the student and all accounts owned by the parents for any member of the household
• Investments DON'T INCLUDE:
• The house you live in
• The value of life insurance
• The value or retirement plans (401K, pensions, annuities, non-education IRA, Keogh)
• Cash, savings and checking accounts.
• UGMA & UTMA accounts for which you are the custodian, but not the owner.
• #92 Net worth of your parents' current business/investment farms. DON'T INCLUDE a family farm or family business with 100 or fewer full-time employees (So, this applies to virtually no one.) 
• #93 Parents' additional financial information... some of which is on the tax return.
• a. Education credits-- Line 49, Form 1040
• b. Child Support paid 
• c. Parents' need-based employment portions of fellowships
• d. Parents' taxable student grant & scholarship aid
• e. Combat or Special Combat pay
• f. Earnings from work under a cooperative education program offered by a college
• #94 Parents' Nontaxable Items (everything else...)
• a. Payments to tax-deferred pension and retirement savings plans (on W-2)
• b. IRA deductions & payments to self-employed SEP, SIMPLE, Keogh & other IRS qualified plans.  Line 28+Line 32, Form 1040
• c. Child Support Received (don't include foster or adoption payments)
• d. Tax Exempt Interest.  Line 8b, Form 1040
• e. Nontaxable portion of IRA distributions. Line 15a- Line 15b, Form 1040
• f.  Nontaxable portions of pensions. Line 16a- Line 16b, Form 1040
• g. Housing, food, and other living allowances paid to members of military, clergy, others
• h. Veterans' non-education benefits, such as Disability, Death Pension, and/or VA Education Work-Study allowances
• i. Other nontaxable income not reported like Worker's Comp, Disability, HSA deductions

If all this makes you want to cry, just give us a call... we can help.