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Updated about 3 years ago,
Income "add backs" for self-employed when qualifying for lending
Good morning!
I'm a Tax Preparer in CA, and recently I've been getting more and more clients requesting to not take certain deductions on their tax returns because they want to keep their income high for lending purposes --regardless of the tax liability. Yes, I know owners are not supposed to knowingly omit expenses.
Anyhow, a fellow preparer introduced me to a concept called income "Add Backs". From my research, there are certain deductions that lenders will allow self-employed individuals to "add back" to their income for lending qualification. The deductions I have found so far that can be used with this add back method is: Depreciation, Director Wages, and Interest.
Question: are there any other deductions that can be added back to income for self-employed taxpayers?
TIA :)