Please Do Not File 2022 Taxes If…
You are self-employed and 2022 was a down year.
This is a huge reminder to all self-employed borrowers (real estate agents too) to just file an extension for 2022 taxes – IF their income was way down in 2022 AND they want to qualify for competitive mortgage financing in 2023.
If self-employed borrowers file an extension, we can use the income from 2020 and 2021 tax returns to qualify them.
Self-employed borrowers will need to prepare an estimated “profit and loss” statement for 2022, but they do not need to be “official” or prepared by a CPA in most cases.
Filing Taxes Now Can Also Delay Closing Dates!
One more reason not to file taxes now is that doing so can delay closing dates.
This is because lenders often demand “proof” that the taxes in the loan file are the same taxes filed with the IRS (to prevent fraud), and sometimes it can take a few weeks for the IRS to provide that proof in the form of tax transcripts.
Hence, if taxes are filed a few weeks before a transaction is set to close, the closing date can be delayed while lenders wait for the IRS to deliver those transcripts.
NOTE: TAX FILING DEADLINE EXTENDED TO OCT. 16 FOR DISASTER AREA TAXPAYERS – which includes most of CA. The normal deadline for most of the U.S. remains April 18th.
March 22 Is “Fed Day” & Powell’s Pickle
The Fed announced a 0.25% hike Fed Funds Rate on Wednesday, March 22, and the markets digested the news (focusing heavily on Powell’s comments).
Powell’s pickle was this: raising rates might exacerbate the still looming banking crisis, but not raising rates could exacerbate inflation.
We should expect market volatility (movement in rates) based both on the rate announcement and Powell’s comments, particularly in regard to inflation.
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