Tax returns are documents that records an individual or businesses income or earnings over the past year. Once this income is filed it is then recorded with the IRS and becomes "documented" income that can be then considered by lenders as monies that will be used to pay back a loan or debt. That being said, the income that you do or do not claim on your tax returns will determine if you will have additional or less access to capital from lenders in the future. Unfortunately consumers annually are often ill advised to write off too much of their profits or income to reduce their tax liability without being informed of the possible affects it could have long term or in the future such as decreasing how much capital they will have access to from lenders when needed.
It important to note that the majority of lending decisions are made using your Adjusted Gross Income (AGI) and not your gross yearly sales. When calculating AGI it is simply your annual overall gross sales minus your write offs and expenses. In other words, if your annual gross sales equal $100,000.00 and your write offs are $75,000.00 then your Adjusted Gross Income (AGI) after write offs and expenses will be $25,000.00. This is typically the amount that most lenders will use to calculate your debt to income ratio when considering you for a loan to determine whether you will be approved. Filing your taxes improperly or without consulting a professional tax preparer or consultant cost consumers a great deal of loss to future capital for things such as buying a home, getting personal or business loans, and more. Contact a financial consultant
today for a free consultation!