[daynknight]

Hi, I was wondering if anyone can answer this question for me. We are self
employed and receive a 1099 at the end of the year. We take what ever
deductions we can for what we do. Now we are trying to refi and they are
saying that are debt to income ratio wont do it.I was wondering if we take
less deductions this year to increase are income is that legal and would it
raise any flags.I understand that it will raise my tax's but in the long
run the interest rate would lower greatly. Any advise???

Thanks
Doris

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[Paul Thomas]

"daynknight" wrote
> Hi, I was wondering if anyone can answer this question for me. We are self
> employed and receive a 1099 at the end of the year. We take what ever
> deductions we can for what we do. Now we are trying to refi and they are
> saying that are debt to income ratio wont do it.I was wondering if we take
> less deductions this year to increase are income is that legal and would
> it
> raise any flags.I understand that it will raise my tax's but in the long
> run the interest rate would lower greatly. Any advise???




The only time ~not~ taking the deductions is a problem with the IRS, is if
it causes you to pay less tax, or receive a greater refund (ala EITC and
other refundable credits). Now, if you tell lies on your mortgage
application, that generally ranks higher than tax trouble (you lose your
house because you can't make payments from jail). If you don't really make
that amount of income, then don't tell the lender you do. I'm not sure that
in the current lending environment that you showing business profits of say,
$20,000 two years ago, $20,000 last year, and then $80,000 in the year you
refi is going to sail through as easy as it might once have done.

Other than that, if you have this one year spike, it may cause the IRS
computer to spit out your return(s) to be looked at by an individual. They
would wonder if maybe you were taking excessive deductions in prior (and
future) years, so make very sure you don't have problems in your business
deductions/expenses.

The one I see most commonly that brings profits down is Section 179. Not
taking it (to bring profits up) isn't an issue.




--
Paul A. Thomas, CPA
Athens, Georgia