Question concerning issue with last year [2015] tax return (income tax, approved, credit score)
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Jumped on Turbo Tax to start my 2016 return only to discover their program didn't compute my 1099R income as AGI. My fault for not catching it, last year was the 1st time I didn't have my accountant do my taxes. Fortunately, I caught it before making the same mistake this year.
Question, all things equal will this one [1] factor keep me from being approved for a mortgage when they request my last two year's tax returns before closing?
IRS hasn't flagged it yet, I understand it typically takes a couple of years for them to play catch up. I haven't filed an amended return [yet] but I'm guessing I owe $4500. My return this year would cover that but 1st I'll see if I qualify for a payment plan option as I would like to knock out the rest of my cc debt before getting pre-qualified. My credit score is 730 currently and with the cc debt removed should be 770 ballpark.
Does this sound like the best option moving forward? TIA
Your first priority is to be right with your federal taxes. Everything else is secondary. File a 1040X while you are doing this year's taxes and settle the IRS debt. Better for you to reach out to them. BTW, it doesn't take them too long to figure out reported income--the 1099 is in your file with them already and you can bet you're already flagged, even if just a paper audit.
1099-R is used to report the distribution of retirement benefits such as pensions, annuities or other retirement plans.
Box 4 of Form 1099-R is the federal income taxes withheld. The federal taxes withheld are added to your tax payments on your tax return Line 64 Form 1040.
1099-R is used to report the distribution of retirement benefits such as pensions, annuities or other retirement plans.
Box 4 of Form 1099-R is the federal income taxes withheld. The federal taxes withheld are added to your tax payments on your tax return Line 64 Form 1040.
In my case there was zero [0] withholdings of federal taxes.
TRUE STORY: I missed including a $5.00 interest earned. Three or four years later I had a bill in my mailbox with a letter. The bill was was around $150. Penalties and interest, my friend, are harsh. Get the 1040x filed immediately and send with 2016. I have never seen the payment plan not offered, but almost all lenders will require IRS debt to be paid in full. If the amount of penalty and interest is crazy high, you can hire a tax attorney to negotiate a settlement. They know their way around the agency.
Your mortgage lender will use the income in the amended return to calculate your income.
TRUE STORY: I missed including a $5.00 interest earned. Three or four years later I had a bill in my mailbox with a letter. The bill was around $150. Penalties and interest, my friend, are harsh. Get the 1040x filed immediately and send with 2016. I have never seen the payment plan not offered, but almost all lenders will require IRS debt to be paid in full. If the amount of penalty and interest is crazy high, you can hire a tax attorney to negotiate a settlement. They know their way around the agency.
Your mortgage lender will use the income in the amended return to calculate your income.
Amended return last weekend / sent certified mail. I owe $7900,* requested $125 monthly installment payments, looking into another part-time job so I can pay it off ASAP. Still waiting on a 1099r to finish up my 2016 return [ended up owing $635 on my federal].
I'll get this taken care of. My credit score is 754, my Front-end DTI ratio is 23.8% & Back-end DTI 34.7%.
* original estimate was off in my 1st post.
Last edited by Sonatina; 01-26-2017 at 03:26 PM..
Reason: sp
TRUE STORY: I missed including a $5.00 interest earned. Three or four years later I had a bill in my mailbox with a letter. The bill was was around $150. Penalties and interest, my friend, are harsh.
People know this happens, but it's ridiculous. If it takes them three or four years to find a $5.00 mistake, that's problem number one. Problem number two is that they'd actually pursue it. I guess if a few hundred thousand folks colluded to hide their $5 it might add up. But even then that $5 is only gonna change the tax owed one out of ten times (from first glance at a tax table). On the other hand, that one time it does change the bracket results in a jump considerably more than $5.... so maybe.
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