March 17, 2021
Tax season brings about much dread or much excitement - depending on whether you owe the Internal Revenue Service (IRS) money or are due a refund. In either case, the filing process usually isn’t fun. It involves gathering paperwork, crunching numbers, and meeting a deadline. But, when you file your tax return could have a more significant impact on your life than you previously thought.
The most obvious timing issue is the actual tax deadline. Unless otherwise declared by the federal government, your tax return for the preceding year is due on April 15th. If you need extra time, you may file an extension that covers you until October 15th. However, you’ll have to pay any estimated tax owed when you file because Uncle Sam doesn’t like to be kept waiting.
Filing on time is essential. You’ll feel better getting the task off of your plate. Plus, if you don’t have a good reason for filing late, the IRS may charge interest and penalties on what you owe. Combined, the failure-to-file and failure-to-pay penalties could climb to a whopping 47.5% of your balance due - on top of your actual tax bill.
So, it’s clear that you need to file (and pay) your taxes by the due date. Missing that deadline can have serious financial consequences. However, when you file could also have a major impact on another area of your life: getting a mortgage.
When you apply for a mortgage, the bank will need to see 1-2 years of tax returns to ensure that your income is stable and sufficient enough to make your monthly payments. If you own 25% or more of a business, you’ll likely have to submit 1-2 years’ worth of those returns, too. This is standard industry practice.
But, you could run into trouble if the banker wants the most current year’s return and you haven’t filed it yet. Unfortunately, it can take up to eight weeks for the IRS to process your return after you submit it. That delay could cause you to lose out on the house of your dreams, requiring you to start the home search over and filling your heart with regret over what could’ve been.
Fortunately, it doesn’t have to be that stressful. ModernTax is a brand new, cutting-edge application processing interface (API) that can dramatically speed up the tax return filing process. The secure, easy-to-use tool helps your tax preparer pull your tax transcripts directly from the IRS database. That way, you’ll spend less time answering questions and gathering information. Your return will be in the government’s hands fast, increasing your chances of getting that mortgage.
You probably hadn't given it much thought before, but when you file your tax return absolutely matters - especially when you’re looking to buy a house. It’s a good idea to learn the underwriting requirements of potential lenders in advance. That way, you’ll know if they require the most current year’s tax return. If they do, technology like the ModernTax API will be here to make the process quick and easy - so you end up in the home you want.