Amex asked for Tax Transcript after CLI request. Should I cancel card and apply for new one?

[duck1098]

I had 20k limit when I first opened the card in 2014. After my balance ran up they reduced my limit to 4k. Now that my balances are mostly paid off and I have 800 score I thought I'd request a limit increase on the site. I asked for 20k and it says it needs to verify income. I then tried lower amounts and it said the same thing. Problem is I haven't done my 2016 and 17 taxes so I'm thinking about just canceling the card and applying for a new one which will hopefully start at a higher limit. I have another Amex which is much older with 20k limit so I'm keeping that one open. My question is, will they ask for income verification if I cancel the $4000 card and reapply for another card? 

[Anonymous]

Well, that's an interesting predicament to be in.  How did you not do your taxes for 2 years and not have the IRS knocking on your door?

If you cancel and you're being prompted for a 4506-T on a CLI you'll probably hit the same prompt on a new account since Amex wants to see your income and they don't take pay stubs for POI.

It has 5 years of aging to it so, I would keep it for now and just fly under the radar until you get your paperwork together and filed.  4K won't kill you unless you're spending 20K/mo or something extraordinary along those lines.

[K-in-Boston]

I agree that generally speaking if you're being hit with 4506-T requests, you have likely reached your current maximum exposure with American Express unless you decide to comply with their request.  You can safely ignore the letters you receive in the mail from them (you will get one from El Paso for each time they prompted you for the 4506-T).  In the meantime, if this is a card that you want to use and you do have $20,000 on another card with them, you are free to move limits around on cards once every 30 days.  It's instant and can be easily done online in your account.  Also, it's important to note that Amex only allows CLIs up to 3x the current credit line, and only one CLI among all of your cards each 181 day period, so the most you could get on a $4,000 card would be $12,000.

[wasCB14]

If a $20k card is CLD'ed to $4k, would the 3x rule still limit a CLI request for an additional $16k?

Definitely get those returns filed. That said...

I wouldn't necessarily cancel. I was in a somewhat similar situation earlier this year. I wanted a big CLI to pay taxes via CC on a substantial capital gain, but hadn't yet filed the tax return that showed the increased income. I didn't provide any returns and didn't get the CLI, but Amex did let me exceed my CL to make the payment. I just had to pay my balance down a lot when the statement came due.

When I applied for a Delta Platinum card a few months later, I used my normal income in the application (not counting the recent gain) and was instantly approved for a nice CL without the need for any documentation. So even if the request for a CLI fails because a tax return transcript is not provided, that doesn't necessarily mean they will want to see your tax return when you apply for a new card.

Now, Financial Review is another matter. That's more aggressive and rushed than a request for proof of income. If you closed your accounts when you were under FR, then when you tried to get a new card they might require you to complete the FR first.

[CreditInspired]

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@duck1098 wrote:

I had 20k limit when I first opened the card in 2014. After my balance ran up they reduced my limit to 4k. Now that my balances are mostly paid off and I have 800 score I thought I'd request a limit increase on the site. I asked for 20k and it says it needs to verify income. I then tried lower amounts and it said the same thing. Problem is I haven't done my 2016 and 17 taxes so I'm thinking about just canceling the card and applying for a new one which will hopefully start at a higher limit. I have another Amex which is much older with 20k limit so I'm keeping that one open. My question is, will they ask for income verification if I cancel the $4000 card and reapply for another card? 

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Hi and welcome to MyFICO

I think most definitely they would ask for IV if you apply for another card or you may be denied altogether. Please note that IV and tax transcript are 2 different things. IV could just be your paystubs where 2016-2017 taxes could just be your W2s (unless they asked for IRS 4506-T form). What did AmX ask for specifically?

And this is just my 2cents. If I were you, I wouldn't close the $4K card if that's what you mean by cancel; and heads-up: Don’t poke the bear. AmX may wake up and ask for tax transcript on your older AmX card too. 

Sometimes it’s best to leave well enough alone. 

[Anonymous]

They did this to me solely for applying, what a woosey.

[Anonymous]

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@CreditInspired wrote:

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@duck1098 wrote:

I had 20k limit when I first opened the card in 2014. After my balance ran up they reduced my limit to 4k. Now that my balances are mostly paid off and I have 800 score I thought I'd request a limit increase on the site. I asked for 20k and it says it needs to verify income. I then tried lower amounts and it said the same thing. Problem is I haven't done my 2016 and 17 taxes so I'm thinking about just canceling the card and applying for a new one which will hopefully start at a higher limit. I have another Amex which is much older with 20k limit so I'm keeping that one open. My question is, will they ask for income verification if I cancel the $4000 card and reapply for another card? 

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Hi and welcome to MyFICO

I think most definitely they would ask for IV if you apply for another card or you may be denied altogether. Please note that IV and tax transcript are 2 different things. IV could just be your paystubs where 2016-2017 taxes could just be your W2s (unless they asked for IRS 4506-T form). What did AmX ask for specifically?

And this is just my 2cents. If I were you, I wouldn't close the $4K card if that's what you mean by cancel; and heads-up: Don’t poke the bear. AmX may wake up and ask for tax transcript on your older AmX card too. 

Sometimes it’s best to leave well enough alone. 

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As far as I know, American Express only accepts transcripts of tax returns (as authorized for release to them via IRS Form 4506-T) as proof of income. Perhaps your information is more current but I've never known Amex to accept paystubs or W-2 forms when they request proof; its always been your last year's tax return.  Other lenders might accept other forms of proof but not Amex.

[CreditInspired]

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@Anonymous wrote:

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@CreditInspired wrote:

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@duck1098 wrote:

I had 20k limit when I first opened the card in 2014. After my balance ran up they reduced my limit to 4k. Now that my balances are mostly paid off and I have 800 score I thought I'd request a limit increase on the site. I asked for 20k and it says it needs to verify income. I then tried lower amounts and it said the same thing. Problem is I haven't done my 2016 and 17 taxes so I'm thinking about just canceling the card and applying for a new one which will hopefully start at a higher limit. I have another Amex which is much older with 20k limit so I'm keeping that one open. My question is, will they ask for income verification if I cancel the $4000 card and reapply for another card? 

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Hi and welcome to MyFICO

I think most definitely they would ask for IV if you apply for another card or you may be denied altogether. Please note that IV and tax transcript are 2 different things. IV could just be your paystubs where 2016-2017 taxes could just be your W2s (unless they asked for IRS 4506-T form). What did AmX ask for specifically?

And this is just my 2cents. If I were you, I wouldn't close the $4K card if that's what you mean by cancel; and heads-up: Don’t poke the bear. AmX may wake up and ask for tax transcript on your older AmX card too. 

Sometimes it’s best to leave well enough alone. 

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As far as I know, American Express only accepts transcripts of tax returns (as authorized for release to them via IRS Form 4506-T) as proof of income. Perhaps your information is more current but I've never known Amex to accept paystubs or W-2 forms when they request proof; its always been your last year's tax return.  Other lenders might accept other forms of proof but not Amex.

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You’re correct MaizeandBlue

I was just trying to make a distinction for OP of the different terms since he talked about income verification and his 2016-2017 taxes without once saying IRS 4506-T transcript.