Your Federal Income Tax Return for a Loan Modification

If you have not filed your tax returns and do not have an extension you will not be able to get a loan modification without first completing them

Why does the bank need copies of my federal income taxes?

For any loan modification you must provide your COMPLETE federal income tax return for the past 2 years. If self-employed, provide copies of the 2 most recent year’s business tax returns including any applicable schedules. Some of the banks only require on e year now. Don’t forget, you must also sign and date the second page of your tax return. The bank needs to see how much you’re earning to get an idea of your financial circumstances.

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Why You Need To Provide Tax Returns

Many people ask why a bank needs copies of tax returns when they already have your paystubs which basically contains this information. One reason is that this provides additional verification of your income and details your financial status over a yearly period. It also shows a bank any other potential income a borrower may have.

What If I Haven’t Filed Recently?

If you have not filed the most recent tax return and have an extension that is generally acceptable. If you haven’t filed your tax returns for a year or two you will probably have a problem getting a loan modification. If you a missing more than a year and do not have an extension you will be forced to complete them. If you are just unable to locate them or unable get a copy you should contact the bank and ask if the 4506T or 4506EZ will be sufficient. You have to provide these anyway and sometimes they will allow this.

Tax returns must be signed and dated. Many homeowners fail to do this wich can delay the loan modification process a few months.

Our Mortgage Toolbox provides detailed instructions on submitting tax returns and also provides helpful hints on items the banks look for. It’s comprehensive, completely outlining every step and every contingency that might arise.


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