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Can some of you mortgage gurus explain to me exactly what it is that the underwriter is looking for on a tax transcript? Are they just wanting to verify income and identity? Will the be looking at my filing status? Will they be scrutinizing my dependents (as they are my brother's children who lived with me at the time. My brother was unemployed and could not file them on his own.) I also filed my brother on one of the years that they are requesting because he was a full-time college (under age 25) student and did not work and was living with me. Will any of this be a problem due to the fact that I will not be claiming these dependents in the future? Refund amounts?
Also, I received a letter from the IRS last week about taxes owed. A company I worked for (as an independent contractor) in 2009 did not provide me with a 1099 and I had honestly forgotten about the income (a little more than $1700). Now I am being required to pay back $500 but have requested an extension until August. Will this show up as a tax lien? Will it cause a problem with my mortgage approval?
The mortgage process is sooooooooooo stressful and I am about to lose my mind! If anyone can enlighten me it will be greatly appreciated!
You sign http://www.irs.gov/pub/irs-pdf/f4506t.pdf which allows the lender to request a copy of yout tax transcripts from the IRS, and the underwriter is looking to make sure the tax return you provided matches your tax transcripts.
The income tax you owe will need to be paid prior to closing.
@ShanetheMortgageMan wrote:You sign http://www.irs.gov/pub/irs-pdf/f4506t.pdf which allows the lender to request a copy of yout tax transcripts from the IRS, and the underwriter is looking to make sure the tax return you provided matches your tax transcripts.
The income tax you owe will need to be paid prior to closing.
is this part always true?
@doublespaces wrote:
@ShanetheMortgageMan wrote:You sign http://www.irs.gov/pub/irs-pdf/f4506t.pdf which allows the lender to request a copy of yout tax transcripts from the IRS, and the underwriter is looking to make sure the tax return you provided matches your tax transcripts.
The income tax you owe will need to be paid prior to closing.
is this part always true?
Yes, or a payment plan established, but usually lenders like to see a payment history already on it and not just beginning.
Shane--
To expand on this; I haven't filed in 7 years but I have been paying taxes to the IRS (via w2, don't ask me why I didn't file, I have no idea. scared of paying 1000 bucks? Who knows -- correcting this now) -- What are the lenders wanting to see? For example, do they just want/see the three years of recent transcripts?
Ideally, I should only owe about $3500 when it is all said and done, but I didn't know if I could incrementally file. Example, maybe just file the last three years so they are in the system right now, and pay them outright and then worry about the 04-07 after doing the last three years.
Only reason would be because if the lender only see the last three years off the bat, I could have a lagtime to pay off the rest. PLUS, I have all the W2s back to 2008, but I have had to send in the form to request the 04-07 W2s that were lost over the years. I could be waiting 45 days for those as I just did them today.
I have no federal liens, so I guess I am just asking if their is ANY advantage to not filing all at once. Or should I waiit til I get the other W2s and file at once. My tax issue doesn't appear too complex
-scott
Last 2 years of tax transcripts, very rarely is a 3rd year needed. If you know you are delinquent on other federal debt (such as the IRS) that needs to be disclosed though, so best to file all at once as if they keep on finding that you just filed they may want to continue to confirm that you have filed all of your past tax returns.