No matter where you are living in the world, it’s almost guaranteed that each day brings with it plenty of new opportunities and challenges for you. It is how you handle these things that makes a difference.
Whether it’s something that’s economically or socially related or perhaps it’s a geo-political or weather-related event, it’s important to embrace what you can control. Otherwise, even the most thoughtful of plans won’t have much chance at success.
For example, let’s take a look at tax return filing. At the beginning of every year, many of you will either make the decision to self-prepare your income tax returns for submission to the IRS or retain the services of a licensed tax professional to do so on your behalf. This is usually the first step in your annual tax planning process with the IRS, which is to decide who is going to prepare your tax returns for filing to them.
Typically, the next step is to determine at what point during the year is best for you to file your returns with the IRS.
While individuals and businesses have different filing deadlines to meet with the IRS during the course of the year, generally there’s two common months that stand out. The month of April and the month of October.
If you are looking to apply for a home loan or if you are in the middle of one now, then you should be communicating your planned income tax return filing strategies with your lender as soon as possible. This is especially critical if your planned filing date is toward the end of the year, like in October.
Often times, if you’re already a homeowner and want to take advantage of a sudden drop in interest rates, you could be unable to do such if your tax return filing date was intentionally extended until the last minute. This becomes more complicated if you are looking at JUMBO loan financing because you will likely see a request from your lender for two years of filed tax returns, instead of just one for any borrowers with retirement, Social Security, disability or other types of 1099 income that’s used for loan qualification.
Although, of course, there are a few workarounds and exceptions. If you receive only straight W-2 income, then only a copy of your W-2 and your W-2 tax transcript will be required. In that scenario, a tax return and tax return transcript are not required. Even if you don’t file tax returns, a tax return transcript showing no record found must still be supplied to your lender.
If your lender requires your tax return for whatever reason before they can issue your loan approval, time is running out to get that filed. Should there be a window of opportunity that begins to close in either the real estate or interest rate markets in the upcoming months, control what you can and don’t get caught riding that tax return extension wave to the finish line.