How should I file my 2009 taxes in order to have the greatest chance of being approved for a home loan? I have been self-employed since 2004 but I was also employed full-time for another company until 10/07. My 2004-2005 taxes were filed under an LLC S-Corp. 2006 taxes under sole-proprietorship and W2 for my full-time employer. 2007 & 2008 I used Turbo Tax Home & Business as a sole proprietor. I’m going to a reputable accountant, tax consultant, and mortgage broker next week for more advice but would like to prepare myself with any other questions before doing so. My business has made a profit since I started it in 2007 but as many business owners do, I’ve had enough deductions to show very little profit. I’m concerned the banks won’t like this. I can show a great profit for 2009 if I need to in order to get a loan as my company really does make a good profit. I hope this makes sense. Does anyone have any answers that might help. I currently do my taxes myself but will a lender want a professional office to have completed my taxes? Thanks

The federal government’s biggest single source of revenue is from
foreign aid.
loans from banks.
big business.
individual income tax.
2. Someone’s total income minus certain deductions and personal exemptions is that individual’s
taxable income.
gross income.
withholding income.
depdendent tax.
3. When the government’s borrowing is greater than its income, it creates a
national debt.
government securities’ risk.
withholding situation.
national taxable income.

I’m trying to understand the rationale behind WHY the use AGI instead of business income. And more specifically, I know they will add back depreciation which makes sense – but would they also add back things like "student loan interest deduction"? What about "1/2 of self employment tax deduction"?

When a bank is deciding whether or not to give you a loan, the use of a Debt to Income ratio already takes into account your monthly student loan payment, so it seems like "double dipping" that they can use it to knock down your income a few notches lower, and then turn around and also have that same category take away from your monthly spending power.

And don’t get me wrong, I completely – 100% – agree with your debt to income ratio being affected since a student loan is a monthly expense, but it’s hard for me to understand why they would also reduce your income for something that has nothing to do with the bottom line of your business income earning power? It seems to me like it would be fair to do one or the other, but not taking away from both sides.

If the gov’t wants to give you a deduction for student loan interest, or for 1/2 of self employment tax, and that reduces the amount you pay them then great. But I’m not seeing how the gov’t giving you a tax credit really has much to do with your ability to pay back the bank mortgage. You’ll pay the bank back if your business is profitable, how much money you are bringing on an income statement (Income – expenses = net profit).

Can anyone help me to understand this?
"AGI what you pay bills with"

Actually, I’m failing to see that connection. My student loan interest is already accounted for in the debt to income ratio the banks use. Right? So why are they then going and reducing my income as well?