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Excelsiusxs · Joined: 01 Mar 2010 Posts: 2 1.78 Dollars($)

My friend is a student and always does his taxes himself. This year he wants to buy a home so he can live near campus. The problem is that he hasn't done his taxes yet and he needs to show his most recent tax year income to qualify for a loan because he made more money than usual. We were talking the other day and he told me that he has a dilemma with deductions and the amount of income showed. He wants to submit his application soon, but he does not have enough time to go through all the deductions. Then he brought up an interesting point: what if he just finishes his taxes for now with TurboTax, not submit it to the government yet, print the tax return for loan qualification purposes, and then go back before April 15 and add whatever deductions he missed and this time submit it to the government in a month or so? I told him that the loan officer might figure out that his taxes were not submitted yet, but he said that they do not have access to your taxes, even though they have your social security number. I was wondering what some of the experienced loan officers think about this because I don't know enough to know whether he is right or wrong. I know he's a bright guy, so he must know what he's doing. I just want to make sure that he will be ok.

jenkin7 · Posted: Tue Mar 02, 2010 12:50 am Post subject:

Hi Excelsiusxs,

Lenders will require your friend to request the IRS for a copy of his tax return information using the form 4506T. The transcript shows the line items from his tax return as it was filed with the IRS. The lenders will review this transcript before offering your friend a home loan to make sure the income he put on the mortgage application was correct. Thus, the lender will come to know whether he has filed his taxes or if he has falsified his income on the mortgage application.

Posted: Tue Mar 02, 2010 1:48 am Post subject:

Perhaps he should join this forum to learn more... Anyway, he told me that the form you mentioned won't be necessary because he will already provide the lender with the copy of his taxes printed from Turbotax - so they will have the official taxes with all the lines and deductions. About two years ago I also used turbotax and I know that there is a capability to save the output as PDF (though I don't know how is it possible to print the taxes without submitting - maybe the software has changed), but basically he is going to email the pdf format of his taxes. Are you saying that he still has to submit that T form even though he's already submitting the full taxes?

Guest

Sorry, I don't know why the above message didn't automatically show my name, but it was posted by me, the OP. Thanks for all your help.

gmakerley · Posted: Tue Mar 02, 2010 10:21 am Post subject:

the 4506T is a requirement in large part because of tricks such as you described in your initial posting. for someone to submit a completed tax return that hasn't been filed with the irs and anticipate that a lender will use those numbers (even though they're incorrect) is misleading himself. by revising the numbers and filing a real tax return later, he's essential defrauding the lender - which of course, he must swear not to do when submitting an application.

virtually every lender is going to look for the transcripts, so as to be able to verify that what your friend is submitting is, in fact, what's been reported to the irs. to fork over a completed return and pretend that it's been filed is going to cause him a great deal of heartache when the lender denies his loan request.

Excelsiusxs · Joined: 01 Mar 2010 Posts: 2 1.78 Dollars($)

I directed him to this forum and after he read what's here and on other websites, he knows that he was wrong. The worst part is that here you have a guy trying to buy an inexpensive property that he can afford because it is cheaper than his rent payments, but he can't because of his deductions. I am a student like him too, but instead of self-employment, I also get W-2s. I myself have not been able to get a loan yet. I thought about applying jointly, but there are so many headaches with ownership that I don't know even if that's worth it.

gmakerley · Posted: Tue Mar 02, 2010 11:20 am Post subject:

and in that regard - joint ownership with a non-spouse - take a look at this. i just wrote this concerning a similar question:

http://www.mortgagefit.com/propertytransfer/about35627.html#153349

it's not so much headaches as it is complications. we've seen it in our forums for a long time - boyfriend and girlfriend bought a house and one splits leaving the other holding the bag (and it could be partners in a civil union or a gay marriage, too). there's lots to consider when you think of entering into a joint purchase with an unrelated person. fortunately, with the number of states now allowing gay marriage, this issue has been given much greater consideration and there's plenty of information available for those who need it.

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Unsubmitted tax returns to qualify for a loan