Understanding Non-Taxable Income (aka Grossing Up Income)
How do I gross up non-taxable income? Non-taxable income refers to earnings exempt from income taxes. Common examples include child support, alimony, Social Security income, VA benefits, interest income, and 401(k)/pension income. Properly accounting for these income types is essential for mortgage qualification. Why Grossing Up Non-Taxable Income Matters Mortgage qualification relies on debt-to-income (DTI) […]
What if my self-employed borrower changes tax filing types?
What if my borrower changes tax filing status? Business owners often change their business entity type as their enterprise evolves. For example, a business may start as a sole proprietorship or single-member LLC filing IRS Schedule C, but later transition to an S-corporation to take advantage of tax benefits. This change raises important questions for […]