topic Re: Which income to report? in Credit Cards

Which income to report?

elegia — Mon, 15 Sep 2014 15:10:12 GMT

When reporting income for credit card applications and CLI requests, should you generally report last year's income as shown on your tax returns, or your current/estimated annual salary? I was working full time last year but went back to school this year and only work part time on an as-needed basis (so I don't get regular bi-weekly pay stubs either) now, so my annual income is different from what my 2013 taxes show. Which income should I use?

Also, is there a consensus re: including scholarships/grants/loans as part of income? No, don't report, or yes, do report? And if yes, which ones (all aid received period, just scholarship money, just scholarship money in excess of tuition and fees, just loans in excess of tuition and fees, etc.)?

Re: Which income to report?

ezdoesit — Mon, 15 Sep 2014 16:13:38 GMT

@elegia wrote:
When reporting income for credit card applications and CLI requests, should you generally report last year's income as shown on your tax returns, or your current/estimated annual salary? I was working full time last year but went back to school this year and only work part time on an as-needed basis (so I don't get regular bi-weekly pay stubs either) now, so my annual income is different from what my 2013 taxes show. Which income should I use?

Also, is there a consensus re: including scholarships/grants/loans as part of income? No, don't report, or yes, do report? And if yes, which ones (all aid received period, just scholarship money, just scholarship money in excess of tuition and fees, just loans in excess of tuition and fees, etc.)?

Honestly I would report your income that you currently have because that is you income at the time of the app. It would be different not to re-report the change of income on existing CC.

Re: Which income to report?

sccredit — Mon, 15 Sep 2014 16:26:03 GMT

I always use the AGI from my prior years tax return, or my current base salary. Whichever is lower.

Re: Which income to report?

coldnmn — Mon, 15 Sep 2014 16:32:45 GMT

The only ethical answer you should get here is your current income. Anything else would be frowned on by the mods.

Re: Which income to report?

sarux3 — Mon, 15 Sep 2014 18:37:42 GMT

The difference between the total amount of non-loan education awards (scholarships and grants) and the total cost of education is considered taxable income as far as IRS reporting is concerned. I personally wouldn't use that as a basis for credit card and loan applications, because the CCCs are looking for sustainable income that can be used to repay debt. In any case, you should absolutely NOT include student loans as part of your annual income.

Re: Which income to report?

cashnocredit — Mon, 15 Sep 2014 18:49:31 GMT

If you are asked to provide your "income" as opposed to specific requests such as your "individual income" or "earned income" you may, in general, include all income to which you reasonably expect to have access to. Note this is future oriented, not historical. It isn't income you had access to. This income can usually include other spousal income, unearned income, even portions of student loan proceeds can be counted as income.

For a long, tedious read about it here is the CFPB's final rule:

http://files.consumerfinance.gov/f/201304_cfpb_credit-card-ability-to-pay-final-rule.pdf

Re: Which income to report?

cashnocredit — Mon, 15 Sep 2014 18:53:01 GMT

@sarux3 wrote:
The difference between the total amount of non-loan education awards (scholarships and grants) and the total cost of education is considered taxable income as far as IRS reporting is concerned. I personally wouldn't use that as a basis for credit card and loan applications, because the CCCs are looking for sustainable income that can be used to repay debt. In any case, you should absolutely NOT include student loans as part of your annual income.

The CFPB disagrees.

I agree with you personally but I don't make the rules. The CFPB specifically identifies certain portions of student loan proceeds that count as income.

Re: Which income to report?

sarux3 — Mon, 15 Sep 2014 19:52:43 GMT

@cashnocredit wrote:
@sarux3 wrote:
The difference between the total amount of non-loan education awards (scholarships and grants) and the total cost of education is considered taxable income as far as IRS reporting is concerned. I personally wouldn't use that as a basis for credit card and loan applications, because the CCCs are looking for sustainable income that can be used to repay debt. In any case, you should absolutely NOT include student loans as part of your annual income.
The CFPB disagrees.

I agree with you personally but I don't make the rules. The CFPB specifically identifies certain portions of student loan proceeds that count as income.

Oh, well I was just going off what I've been told, so I'll defer to you on that. But even so, it's pretty risky business in my opinion.

Re: Which income to report?

cashnocredit — Mon, 15 Sep 2014 20:30:55 GMT

@sarux3 wrote:

@cashnocredit wrote:
@sarux3 wrote:
The difference between the total amount of non-loan education awards (scholarships and grants) and the total cost of education is considered taxable income as far as IRS reporting is concerned. I personally wouldn't use that as a basis for credit card and loan applications, because the CCCs are looking for sustainable income that can be used to repay debt. In any case, you should absolutely NOT include student loans as part of your annual income.
The CFPB disagrees.

I agree with you personally but I don't make the rules. The CFPB specifically identifies certain portions of student loan proceeds that count as income.
Oh, well I was just going off what I've been told, so I'll defer to you on that. But even so, it's pretty risky business in my opinion.

I think it is risky as well but that's us. It frankly shocked me when I read that in the CFPB's ruling document. In any case the most important thing is for people to understand what the CFPB actually allows.

Re: Which income to report?

elegia — Tue, 16 Sep 2014 02:18:25 GMT

Alright, thanks for the info, everyone! Glad to get a clear answer finally.