4506T Question, is it for state or federal taxes or Both?

[Anonymous]

Hi guys,

Here is the bad good and ugly question, the 4506t, is it for state or federal taxes or both. I had to sign one today and I

A. Owe on State Taxes no repayment, can possibly pay  now but would it would be rough

B. In repayment plan on federal taxes. (Almost 12 months)

Nothing is on my credit report for either but I did disclose the payment amount on my application. So the debt was factored into my debt ratio. = I

[pizzadude]

zerocredit, to the best of knowledge this would only apply for federal taxes.   4506 is a federal form, I dont believe that states would necessarily accept it, although I could be wrong.

In general I believe that lenders focus on federal taxes when validating your returns/W2s, etc., probably because federal liabilities ( i.e. tax rates ) generally represent a much larger amount for the vast majority of people.

The federal repayment plan will show on your tax transcript when they pull it from the IRS, so it was a good idea to mention it as it definately represents an outstanding liability that will either have to be settled or factored into your DTI ongoing.

out

Assuming that the state amount is much smaller than the federal amount it might make sense to pay it now.   However unless underwriting specifically asks about it or unless it is required to be disclosed somewhere on your mortgage application then I don't know that they will know about it.

How much more ( percentage wise ) would your DTI increase if you factor in the state tax liability ?

[Anonymous]

Not sure how much the state will factor into my DTI, the amount is about $1000, I dont have much debt just two $200 limit credit cards. The problem is $1000 is doable if truly I am made to but I just do not really have it as I am struggling with the down payment. I kind started the process on a whim and now I am in the full blown process. I hope to get the house but if I do not the education of what I need to do to get a house will be tremendous. But if my mortgage would be much cheaper than what I am paying in rent and I can make it for the $8k tax break then I say nothing beats a failure except a try! I did tell my LO about both taxes but sadly he seemed clueless. He stated as long they were not on my credit report, and I had been up front about the federal then we can only hope the underwriter is having a good day! I read somewhere on this board that they have a choice to run the form but may not. They may only use it for audit purposes.