Tax Time Do’s and Don’ts For a Smoother Mortgage Process

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Do:          Write off legitimate deductions such as charitable contributions, mortgage interest, and
dependents.
Don’t:     
Form an LLC, use it to finish your basement for your son’s family,
then deduct a “business loss” of $25,000 on your tax return.



Do:          Give your loan officer complete copies of your last two years’ federal
tax returns, W2’s, and 1099’s.
Don’t:     
Tell
your lender  “your underwriter can’t really go by those tax returns,
because at least half of my income is cash.”

Do:          File your taxes early if you anticipate buying a home this
spring.
Don’t:     
Explain that “you’ve been really busy”, so you haven’t filed taxes for a few years, but hope to soon.



Do:          Remember that self employed borrowers face additional income verification hurdles for mortgages.

Don’t:     Quit your salaried job of 12 years to “join a great new
multi-level marketing network” a week before your purchase closes.


Do:         Be sure to include all applicable income on your tax return.

Don’t:     Give your lender several additional W2’s while mentioning “I think I forgot to include these on my taxes.”

Do:         Double and triple check your tax return for errors prior to submitting it to the IRS.
Don’t:    
Give your lender a “preliminary copy” of your tax return,
then file one with an additional $13,000 in business expenses.

Do:         Deduct all charitable miles driven as permitted by IRS tax code.

Don’t:     Include your faithful hound “Gus” as a dependent on your tax return.



Do:         Subtract court ordered maintenance from your income as a legitimate expense.

Don’t:     List
maintenance expenses on your tax return, then tell your lender “oh, I haven’t really paid that yet.”


Do:         Remember, if self employed, that underwriters don’t look kindly on declining income.

Don’t:     File a tax return showing $127,000 in net income,
then submit an amended return with income of only $16,000 once your loan is in process.


Do:         Write off unreimbursed business meals and mileage per IRS guidelines.

Don’t:     Deduct $7,900 in business meals, then tell your lender “most of these were
just for my wife and I, but my CPA said to include them anyway.”

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