I'm out marketing today (I'm a licensed loan officer remember) and one of my first contacts wants to know if any of my lenders will do a loan for a self-employed person and use bank statements instead of tax returns for income. Her client was lying on their taxes I assume. I'm brand new so I tell her I'll get back to her on that.
Apparently the laws have changed recently and anything involving home loans has to have some form (4506T) sent in to the IRS and that will raise some major red flags if you were claiming one income and trying to buy a house while claiming something higher.
The clients options are to redo their past taxes and claim the higher income, and pay the difference in taxes, or buy a smaller house.
Back when I worked for tips I didn't claim all of my tips but I claimed most. I didn't want to but restaurants claim 15% of your sales and they figure out the taxes on your credit card tips therefore you are taxed on damn near everything you were tipped. Why risk problems with the IRS for what is really a small amount of cash? Considering the house this client was looking at they weren't hiding a small amount of cash but now they have to tell the IRS they made a "mistake" on their taxes or "settle" for a smaller house. Have you ever looked at a house and REALLY wanted it and then found out that you couldn't have it because your past bit you on the butt?
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