Understanding Personal Tax
Returns fully solved &
updated
What can tax returns be used for in addition to verifying income -
answer Whether the borrower owns additional properties; whether
the borrower is involved in other businesses
When are personal tax returns required? - answer Required when
borrower:
- receives income from sole proprietorship (or any business
structure in which borrower has a 25% or more ownership interest)
- is employed by family business or by interested parties to the
subject property
- owns rental property
- derives income from tips, dividends and interest, capital gains,
royalty payments, or a trust
- uses foreign income to qualify
Personal tax returns are defined as: - answer Form 1040 and all
applicable schedules
AGI - answer Adjusted Gross Income
, What prompted the revision of the 1040 and what was the goal? -
answer Tax Cuts and Jobs Act of 2017
Uses "building block" approach to simplify federal tax return
Schedule 1 name and purpose - answer "Additional Income and
Adjustments to Income"
Used to report capital gains, unemployment comp, prize/gambling
money, etc.
Also used to itemize deductions (student loan interest, self
employment tax, educator expenses, etc.)
Schedule 2 name and purpose - answer "Additional Taxes"
Used when tax payer owes alternative minimum tax (AMT) or needs
to make an excess advance premium tax credit repayment
AMT - answer Alternative Minimum Tax
Schedule 3 name and purpose - answer "Additional Credits and
Payments" or "Nonrefundable Credits"
Used to claim nonrefundable credits other than child tax credit or
credit for other dependents, such as foreign tax credit, education
credit, and general business credit
Schedule 4 name and purpose - answer "Other Taxes"
Returns fully solved &
updated
What can tax returns be used for in addition to verifying income -
answer Whether the borrower owns additional properties; whether
the borrower is involved in other businesses
When are personal tax returns required? - answer Required when
borrower:
- receives income from sole proprietorship (or any business
structure in which borrower has a 25% or more ownership interest)
- is employed by family business or by interested parties to the
subject property
- owns rental property
- derives income from tips, dividends and interest, capital gains,
royalty payments, or a trust
- uses foreign income to qualify
Personal tax returns are defined as: - answer Form 1040 and all
applicable schedules
AGI - answer Adjusted Gross Income
, What prompted the revision of the 1040 and what was the goal? -
answer Tax Cuts and Jobs Act of 2017
Uses "building block" approach to simplify federal tax return
Schedule 1 name and purpose - answer "Additional Income and
Adjustments to Income"
Used to report capital gains, unemployment comp, prize/gambling
money, etc.
Also used to itemize deductions (student loan interest, self
employment tax, educator expenses, etc.)
Schedule 2 name and purpose - answer "Additional Taxes"
Used when tax payer owes alternative minimum tax (AMT) or needs
to make an excess advance premium tax credit repayment
AMT - answer Alternative Minimum Tax
Schedule 3 name and purpose - answer "Additional Credits and
Payments" or "Nonrefundable Credits"
Used to claim nonrefundable credits other than child tax credit or
credit for other dependents, such as foreign tax credit, education
credit, and general business credit
Schedule 4 name and purpose - answer "Other Taxes"
