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rambotron OP t1_j6ngpy8 wrote

Reply to comment by FourWayFork in Joint Filing / Applying Solo by rambotron

Thanks for the response. Yes, we will file jointly. The question is whether I account for her deductions (which are considerable but this drops my net income by a noticable amount). I was hoping then to take the deductions on my taxes and still apply for a mortgage solo using my net income only. Excluding her deductions this year.

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FourWayFork t1_j6njuld wrote

Okay, I think I understand now what you are saying.

She had business losses on her farm business. So say she had $20K in revenue, but $25K in business losses that you could write off. You're wondering if writing off her losses is going to hurt you on the mortgage application and you're thinking it would be better to either (a) file your taxes separately (so she can separately deduct her losses), (b) not write off the losses at all and pay taxes as though you had no losses, or (c) somehow have the bank not consider her income/losses and only look at your income.

My first thought is to keep in mind that concealing your true income/losses from the bank in the mortgage process is fraud. If you show them her income, but camouflage her losses to make her business look more profitable than it is, that's bank fraud. (It's basically what New York is accusing Donald Trump of.) So I would certainly not do (b).

I don't think (c) is going to work because you're going to give them your 1040 whether you are applying together or not - they are going to see your combined income.

I don't think (a) would work because business loss only gets deducted against business income, so her losses shouldn't reduce your AGI. You're better off being able to pay the lower tax rates.

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