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Tax time – the time our shoe boxes of receipts come out. Mid April we all become expense hunters in search of ways to lower our Federal Tax burden. Those buying a home and getting an Arizona mortgage – pay special attention when filing your taxes. What helps you save on taxes may hurt you on your mortgage application.
Tip 1: Un-reimbursed Business Expenses
While un-reimbursed business expenses are lower taxable income, also tend to lower the income an underwriter uses for you. You will find your un-reimbursed business expenses on form 2106 or 2106 EZ. While a few 2106 expenses get added back to your mortgage income, the majority reduce your mortgage application income.
Tip 2: Federal Tax Owed
When Federal Tax Return shows additional tax is owed, be prepared to pay it. In order to qualify for a mortgage, there can be no outstanding Federal Taxes owed. Your mortgage lender will consider this tax bill an outstanding liability. Due to the fact the IRS has special IRS powers to enforce that tax debt (levy wages, attach tax liens to property etc…) mortgage lenders get a little antsy about IRS debt. Some mortgage lenders allow payment plans to in lieu of full payment.
Tip 3: Federal Tax Filing Extension
Those filing an extension giving them until October 15 to file taxes – please beware. Borrower’s must pay the estimated tax due prior to closing on a new home loan. This often catches borrower’s off guard come time to apply for a home loan.
Consulting with a mortgage professional ahead of time is the best thing you can do. As you can see, early mortgage pre-approval is always a great idea.
By Jeremy House
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