Work related deductions are great for reducing the amount you owe to Uncle Sam at the end of the year, but it may reduce your qualifying strength. Many will argue that the amount on a W2 is true income and i agree, but FHA, lenders, and their investors collectively are requiring that the job related expenses of the previous 2 years be deducted from the overall income. This can be detrimental depending on how much you decide to write off every year. For example true story, a correctional officer writes off $20,000 for uniforms, gun holster, cell phone expense, etc... that $20,000 must be deducted from his $50,000 income. That leaves him with $30,000 to use for qualifying purposes and it doesn't take a mathematician to tell you that they will not qualify for as much home as they once hoped for. 2106 expenses should be reviewed at the pre-qualification stage to make sure that your realtor is looking for homes in the correct price range. Make sure you provide your income tax returns for the previous 2 years along with the rest of the documents required for pre-approval. In conclusion, if you are planning on buying a home in the future and you have not filed your income taxes please make sure that you use conservative figures with your job related deductions. It would be a good idea to consult with me before you file your taxes to ensure that you are in the proper position to buy a home in the near future.
Central City Mortgage Inc. - Fontana, CA
Steve:
Absolutely. I find a lot more underwriters have been adamant about obtaining actual expense receipts used by the tax preparer to prove up the entry. Notwithstanding, these alleged expenses would still gig the AGI.
May 24, 2009 08:47 AM
Realty ONE Group - Rancho Cucamonga, CA
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Rainer
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Steve Chavarria
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