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It's not income. It's just what it says it is...a REFUND on income you've already earned and overpaid in taxes.
No, its likely not a refund. Its likely another government anti poverty program such as the earned income credit or other programs. Lets say she pays her $1k in fed taxes, the gov writes her a check for $12k when she files her taxes. The more she makes, the less money she gets. Its supposed to boost people out of poverty.
I have no idea if it can be claimed as income for buying a house.
Because he makes a lot more money than he officially shows. A lot of people, like tattoo artists and nail salon workers, can cheat the system because they get paid cash.
More on this.
I personally know a nail salon owner. I don't like the guy. I think he's a sorry excuse of a human being. He always brags that he makes $200k a year but he only claims around $25k or so so he gets government assistance because he's got a family. Yes, they are on food stamps even though they live in a big-ass house and drive luxury cars.
That's a good question and while I don't know if underwriters consider it a part of your income, I can tell you the IRS does seem to consider it income since they tax it the following year.
I can't figure out how you get a $12,000 refund on a yearly income of $29,000????
I'll take a guess here. Might be a Head of Household CREDIT and/or Earned Income Credit. Those combined with the dumb idea of letting the government set up a savings plan for you via over-withholding your taxes could POSSIBLY add up to that kind of refund. Maybe.
He didn't say he wanted a $200,000 mortgage. He said he would have enough of a down payment to pay the 3.5% of an FHA to pay for a $200,000 mortgage (which is $7k, which is what he has saved).
He's wondering how much of a mortgage he would actually qualify for.
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Tax refunds are not income they are overpayment of taxes on income the previous year, and would not be considered as part of one's income/expense ratio for a mortgage. Mortgage qualification requires verifiable income, so cash business money that people hide from the IRS/state won't help. They will be only considering the $29,000, so with $7,000 down I would expect the OP to qualify for a maximum mortgage payment of about $800/month, at 4% interest about a $150k house.
If the OP is getting Earned Income Credit + refund of withholding of $12000..........there are a lot of mouths to feed each month.........let alone make a mortgage payment.
It's not income. It's just what it says it is...a REFUND on income you've already earned and overpaid in taxes.
Hi haudi. That's my point. This refund is part of my income, that was withheld by my employer/IRS during a year, then returned to me when I file taxes. As AmFest points out right after you, I should fix this issue on my W-4, but that won't change my numbers until next year.
Hi haudi. That's my point. This refund is part of my income, that was withheld by my employer/IRS during a year, then returned to me when I file taxes. As AmFest points out right after you, I should fix this issue on my W-4, but that won't change my numbers until next year.
But a mortgage underwriter counts your income pretax, not your net. So the 29K is correct as your yearly income.
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