REAL ESTATE 07
Receiving a refund from the IRS affect access to residential loans? SARA NAVARRO - TAX PREPARER
In my practice as a tax preparer, I always get numerous concerns from taxpayers, a prevalent one relates to the purchase of real estate properties: “I want to buy my house this year, I have been told that I should not receive refund, since, if I receive refund or if I have many deductions and credits in my favor, will decrease the chances for me to get a home loan, is that true? ” The answer to this question will always depend on the taxable income of the taxpayer (s) in the fiscal year. A tax preparer cannot prevent you from receiving certain credits that by law correspond to you, since these may depend, for example: 1.- On your Earned Income Credit (EIC), as established by the income tables issued by the IRS for the corresponding year; 2.- On the number of children or qualified dependents up to 17 years of age as of December 31 of the corresponding year and who meet the respective tests to be considered as such, for which the Child Tax Credit, (CTC) will be granted to the taxpayer; 3.- Because he is the beneficiary of a Tax Credit by other dependents (Other Dependents Credit, ODC). In addition to the above, if the taxpayer reports income as a Self-employed and / or as a Independent Conntractor, according to IRS
publications, he can deduct expenses related to his business. Of course, it must be an activity that meets certain characteristics and records of the income and or sales and expenses for that activity must be kept, so if a tax preparer is in front of a taxpayer with these characteristics, he must ask the corresponding questions and prepare the Income Tax according to the information derived from the taxpayer’s records and receipts, not being able to manipulate, increase or decrease any concept. Consequently, if there are many deductions for the activity of the taxpayer or if the product of that information results in a refund in favor of the taxpayer, the tax preparer cannot change that result. It is also relevant that you keep in mind that if you report only income from salaries and wages for your job reflected in a W2, there will be not many deductions that can be made due to recent changes in tax matters. What most commonly happens is that you take the standard deduction according to your filling status on the last day of the fiscal year of your return (December 31). Therefore, the amounts of your Adjusted Gross Income and Taxable Income will depend on your total income, your standard and / or itemized deduction (in the cases that apply), and your Tax Credits (Income credits, Dependents, Savings Credits, Housing, Health Care and Educational), once again, this information cannot be manipulated by your tax preparer.
Therefore, if you are planning to buy a house, do not rely absolutely on what your tax return will reflect, you must have income that can support a housing loan and a good credit score, not everything will depend on your refund or of your deductions or credits.
The above notes do not constitute an opinion or legal advice. I am not authorized to practice law in the United States of America, nor am I a CPA. I am a tax preparer, and the information provided here can be accessed publicly through the Internal Revenue Service website. This information is shared as a contribution to the community in the United States.
