Must I deduct all my business expenses?
Client says mortgage broker suggested that they remove their business expenses to look more appealing for a mortgage. ie Their income would falsely appear to be higher.
"If I didn't claim all of my business expenses, how much would I owe in tax?"
Unfortunately, it doesn't work like that. Rev. Rul. 56-407 says, All business revenue and all business expenses must be considered when calculating net income from self-employment.
If that weren't the case a taxpayer may appear to qualify for tax, other government benefits, or possibly a mortgage, for which they probably shouldn't.
Please don't take tax advice from someone who does not have a strong background in taxation. Now I am fairly confident that the mortgage broker knows nothing of Revenue Rulings and certainly not Rev. Rul. 56-407. So I'll assume the mortgage broker accidentally suggested committing not only tax fraud but potentially mortgage fraud.
Reach out to Financial Clarity Group to help you keep your finances in order so you don't get in hot water. You might be capable of filling out forms yourself but why would you want to do that. FCG does so much more and you have more important things to do. We'll help you put a plan in place to keep the financial pieces of your life in the most tax effective order.
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