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Hello,
I want to app 4 mortgage within the ext 2-3 months. I may have a dilemma according to a friend:
I make $50K+ a year from my primary job.
I also have a side business. I don't make much, but it has helped for tax purposes to reduce my tax liability for the last 2-3 years. My AGI is much less than my actual salary due to the reduction due to losses (BTW: losses are taken in mileage). My w-2's and paystubs will show my actually salary, but my tax returns will show a much lower amount. Will this be a problem when it comes to verifying income to be able to qualify?
THANKS!
yes it will most likely. This is the reason they require tax paperwork. Because, your income and your cash flow are not the same thing. You may have x amount of dollars coming in, but if you write off a bunch of expenses then that extra money is not considered income (or you would have to pay taxes on it). They take the reported income and then add back in a few things (not expenses, but I believe certain depreciation items, etc) and that will be your qualifying income. It is also quite likey they will average your alst 2 years returns for income purposes so you can not just lower your writeoffs this year to fix it.
You can either app and hope you can qualify on the lower income
Re-file last years taxes with less deductions if you exaggerated your expenses and stuff and want to file a more accurate return.