Income Tax Review
“Taxes” and “Internal Revenue Service” provoke universal dread. Don’t let this be you! Filing your taxes the right way is as important as your credit score - especially if you have a second job or a business.
This month, we’re taking the scary out of taxes and putting the power of knowledge in your hands - yes, we’re talking to you, whether you earn a paycheck each month or are self-employed!
The key line on your tax return is your Federal Adjusted Gross Income. Cross check this against your W2 earnings if it’s greater than your W2 total, no worries. If it’s less, talk to your coach and have them review sooner than later.
If you have your own business and file more than one type of tax return, it gets more complicated. For self employment income or new careers, you will need 2 years of consecutive income for it to count toward your mortgage qualification. Your net income from self-employment plus your other earnings is what's used by mortgage companies to qualify you for a mortgage.
For most of you, the critical item is filing your taxes on time and ensuring your tax bill is paid each year. Because, if you owe the IRS and they have a collection action against you, you won’t qualify for a mortgage until the issue is settled.
Act early and act often if you have any concerns about your taxes. If you are self-employed or have 1099 income you will need more documentation than a W2 earner.
This year, take tax season by storm as you prepare for filing and your upcoming mortgage.