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I made $120,000 in 2008 from my employer. I am also a sole proprietor. I showed losses from my sole proprietor of 106,000.00. These losses were paid out of reserves I have especially for this sole proprietor and not out of my earned income for 2008. I showed these loses, though, on my 2008 return in the form of a schedule C. The problem: I wish to buy a home, but the lender is using the adjusted income "14,000" to calculate my debt to income ratio. I would qualify easily if they used my actual income that was earned. Help - is there anything that I can do to get my home?

Submitted: 24 days and 12 hours ago.

Category: Finance

Value: $9

Status: CLOSED

Posted by Lev 24 days and 12 hours ago.

Answer

If your business had losses - there is no "actual income" - so you either used a credit to fund your living expenses or used your savings or investment income.

If you have income that is not taxable - you might need to provide support document for such income and it will be considered.
If you situation has been changed - and you do not have business losses in 2009 - you might also consider to provide supporting information to the lender.

Please let me know if you need any help.

24 days and 11 hours ago.

Reply

Can I amend my 2008 tax return and just "eat" some of the losses. Shouldn't this make my adjusted income go up?

Accepted Answer

If you will reduce your losses - that will definitely push up your adjusted gross income and most likely taxable income.
You might want to consider additional tax liability, penalties and interest.
You might want to verify with the mortgage broker - which AGI is needed to qualify you for a credit.

Accepts:
Expert:	Lev
Pos. Feedback:	99.1 %
Answered:	10/28/2009

Tax Preparer

Personal Investment, Tax Preparation

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