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Thread: Home buying

  1. #1
    Member thegreatdame's Avatar
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    Default Home buying

    I want to aggressively pay down the prinicipal.
    I claim to make on average $30k a year.
    I want to put at least 1k-2k extra per month on the principal.
    I know alerts aren't flagged unless its over 10k. So when asked, I should just be able to say that I made that money gambling to pay the extras?

  2. #2
    God/dess FrustratedBunny's Avatar
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    Default Re: Home buying

    regardless of how you say you made the money you better be paying the taxes on it.

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    Featured Member Katherine's Avatar
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    Default Re: Home buying

    Well... ya are supposed to claim gambling winnings as income... You need to win over a certain amount to trigger the payer asking for your social before paying you so they can alert the IRS, but even if you don't 'win' enough at a time, you can't just 'say' that you made the money gambling, cause then you should be claiming 'that' money as gambling winnings.

    I suppose you could claim the amount you're ready to pay down in advance as gambling winnings. At that rate you could also write off a reasonable amount of gambling losses. BUT- then again, you could only write off as much as you won. So...

    Here's a link to learn a bit more about it.

    http://www.bankrate.com/brm/itax/tips/20010131a.asp

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    God/dess Emily's Avatar
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    Default Re: Home buying

    That is a very good way to go if you want to lose your house (and you've obviously never won a huge jackpot in Las Vegas.)

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    God/dess VenusGoddess's Avatar
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    Default Re: Home buying

    WTF?? You think the government cares how you made your money...but didn't claim it?

    For your information...just because you pay $1000 extra dollars towards your principle doesn't mean that it won't tip off the IRS. You claim to make $30,000 a year...you better damn well make sure that your ORIGINAL mortgage payment is affordable (along with your other costs of living) with your $30,000 a year.

    Geezus.

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    Banned Melonie's Avatar
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    Default Re: Home buying

    as has been stated over and over again in past threads, as soon as you purchase a house (or car or anything else with a title / deed), the state agency that registers that title / deed will automatically report to the IRS the sale price, along with the name, address and SS# of the buyer, along with the amount loaned by a financial institution which filed a lein on the title / deed. It then takes the IRS computers about 2 seconds to calculate the buyer's down payment, the buyer's monthly payment amount, to look up the average cost of living in the buyer's zip code area to determine how much the buyer must spend on things other than mortgage payments, then to search for past tax returns filed under the buyer's SS# and compare the amount of reported after-tax income the buyer had / has available to save up the down payment plus make monthly payments plus pay for other costs of living.

    If the IRS computers find that the income vs spending numbers simply don't match, a 'stage one' red flag goes up - which will initiate wider IRS inquiries into the buyer's credit rating, and from the credit report further inquiries will be made re the buyer's bank accounts, credit card accounts, other outstanding loans (i.e. car) etc. If the wider inquiry confirms that there seems to be a lot more money being spent than has been claimed as taxable income, a 'stage two' red flag goes up and you can count on some 'personal contact' with an IRS agent.

  7. #7
    Banned Melonie's Avatar
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    Default Re: Home buying

    ^^^ as the old Vermont saying goes ... 'you can't get there from here !'

  8. #8
    Member thegreatdame's Avatar
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    Default Re: Home buying

    Oh my.
    Well, I'm positive that everyone on here fails to claim all of their earnings anyway, but I get the point. I'll figure it out.

  9. #9
    God/dess Emily's Avatar
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    Default Re: Home buying

    claiming all your earnings and claiming enough so the IRS doesn't flag you are two totally different things.

    Why bother reporting anything if you're going to hugely underreport?

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    God/dess VenusGoddess's Avatar
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    Default Re: Home buying

    For your info...I always reported ALL of my earnings. In order to have the style of living I want, I would need to. No way to pass off living like I made $80,000 while claiming $30,000.

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    Default Re: Home buying

    Quote Originally Posted by VenusGoddess View Post
    For your info...I always reported ALL of my earnings. In order to have the style of living I want, I would need to. No way to pass off living like I made $80,000 while claiming $30,000.
    Exactly. I'm with you VG. I like having a nice car and nice things. And, for all the vacations I take, using my bank card, I have to report or there goes that red flag!!

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    Featured Member scorpio's Avatar
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    Default Re: Home buying

    Quote Originally Posted by Melonie View Post
    as has been stated over and over again in past threads, as soon as you purchase a house (or car or anything else with a title / deed), the state agency that registers that title / deed will automatically report to the IRS the sale price, along with the name, address and SS# of the buyer, along with the amount loaned by a financial institution which filed a lein on the title / deed. It then takes the IRS computers about 2 seconds to calculate the buyer's down payment, the buyer's monthly payment amount, to look up the average cost of living in the buyer's zip code area to determine how much the buyer must spend on things other than mortgage payments, then to search for past tax returns filed under the buyer's SS# and compare the amount of reported after-tax income the buyer had / has available to save up the down payment plus make monthly payments plus pay for other costs of living.

    If the IRS computers find that the income vs spending numbers simply don't match, a 'stage one' red flag goes up - which will initiate wider IRS inquiries into the buyer's credit rating, and from the credit report further inquiries will be made re the buyer's bank accounts, credit card accounts, other outstanding loans (i.e. car) etc. If the wider inquiry confirms that there seems to be a lot more money being spent than has been claimed as taxable income, a 'stage two' red flag goes up and you can count on some 'personal contact' with an IRS agent.
    where do you come up with this crap? The IRS has no "magic computers" that instantly beep when someone buys a house. No alarming red phones ring on an agents desk somewhere when you send an extra $1000 payment to your mortgage. No men in black are looking through your trash to see if you have name brand merchandise reciepts. Stop your mis information Melonie, it's quite tiresome. Will the IRS ever even know, or care that you paid down your mortgage? Absolutely not. If you sell said home and pocket a profit, THEN, and ONLY THEN will the IRS step in an demand it's pound of flesh.

  13. #13
    Banned Katrine's Avatar
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    Default Re: Home buying

    Less than $10K won't be flagged, but that doesn't mean you wouldn't have to account for it in the case of an audit. If its put in the bank, you may have to prove how you got it.

    Gambling winnings must be reported on form 1040. Believe me, don't try to skirt the IRS on gambling, or use it as an excuse for not paying taxes, they WILL fuck you. Ask my folks who are unable to commit a spare penny to anything until they pay Uncle Same $18,000.

    Sorry if this isn't completely related to the subject.

    You should increase your annual income reported just in case. You can proportionately deduct it with the help of a decent CPA.

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  14. #14
    Banned Melonie's Avatar
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    Default Re: Home buying

    where do you come up with this crap? The IRS has no "magic computers" that instantly beep when someone buys a house. No alarming red phones ring on an agents desk somewhere when you send an extra $1000 payment to your mortgage. No men in black are looking through your trash to see if you have name brand merchandise reciepts. Stop your mis information Melonie, it's quite tiresome. Will the IRS ever even know, or care that you paid down your mortgage? Absolutely not. If you sell said home and pocket a profit, THEN, and ONLY THEN will the IRS step in an demand it's pound of flesh.
    And just how exactly will the IRS know that a home was sold if there isn't any automatic reporting from the state property deed / title agencies as you claim ? Those deed registration / title agencies DO make an automatic report to the IRS whenever a new deed / title is registered ... which makes the IRS just as aware of the buyer as of the seller for any item that requires a deed / title to be registered i.e. houses, condos, cars, boats, jetskis, snowmobiles etc. If the sale was financed, the creditor is also included on the deed / title, and that information is passed along to the IRS as well.

    There is also ample proof that the Census Bureau, the BLS, and the GAO in conjunction with the IRS began to develop a database after the 2000 census which contains statistics on employment / average earnings / tax rates / prices of key items for every different zip code in America, indexed by age / profession and probably a ton of other stuff. You can find most of this stuff yourself by poking around the GAO website ! The IRS undoubtedly uses this database info in conjunction with reviewing tax returns filed by other persons living in the same zip code and working in the same profession to determine whether or not a particular amount of reported income by a particular person is reasonable during a 'first pass' automatic computer comparison. In fact this has become such a widespread tool for the IRS that the better tax return preparation programs now include some of the same database statistics and provide the person preparing the tax return a warning if the values listed on their individual tax return deviate significantly from the database values !!!

    I agree that there probably isn't any automatic feedback to the IRS that a person has made an extra $1000 payment on an existing mortgage - however this is relatively easily calculated by the IRS by comparing a person's mortgage interest deduction for the current year against the mortgage interest deduction for last year. I also agree that the IRS is probably not going to devote human labor towards sifting through the garbage of a random individual taxpayer whose total tax liability is measured in thousands of dollars. From everything that I have been told by people who have worked for the IRS and the NY state tax dep't, the 'meat' of their actual operations always involves maximizing recovery of additional tax revenue in exchange for investing as little as possible in the way of 'expense' to the agency (i.e. human agent's time). This of course translates into a much higher probability of recovering large amounts of tax revenue from people who earn a million dollars per year vs people who earn $50k.

    However, the computer / database / automatic reporting based comparisons do NOT involve human labor on the IRS end (i.e. they can be performed at essentially no cost to the agency), and routinely are used to raise a 'stage one red flag' via automatically generated reports of possible financial non-sequiturs that are then reviewed by human agents. It is then up to the human agents to decide whether the potential recovery of additional taxes justifies making requests for further financial info on the particular person i.e. credit report, bank and credit card statements, loans status (all of which takes about 5 minutes these days) and allowing the computers to review the person's financial situation again given those additional financial details. If the second (mostly) automatic review results in reasonably firm probable cause to believe that tax evasion / underreporting of income is taking place, it is again reported to a human agent ... who must then decide whether or not to kick off a 'stage two' process i.e. 'requests for additional information' being sent to the taxpayer, full blown audit etc.

    Additionally, for the past 3 years the IRS has publicly declared that their primary focus on tax enforcement is changing from verifying deductions to proper reporting of actual incomes by 'cash businesses'. This has already led to major IRS enforcement efforts first being directed toward Casino workers, then towards cabdrivers, and will undoubtedly keep shifting to other professions where workers earnings consist mostly of tips / cash. Last year congress approved a special IRS appropriation for the express purpose of adding human agents to increase tax enforcement re 'adult businesses' - with strip clubs obviously falling into that heading from a financial classification standpoint at least. All of this is verifiable via national news stories if you care to look them up. Thus IMHO the probability of an exotic dancer's tax return being scrutinized is certainly higher this year than it has been in past years.

    But if you figure that the 68 billion dollars spent by the IRS since 2000 to update their computer systems didn't include any new software to go along with the new hardware, and if you figure that the newly hired human agents in the 'adult business' tax enforcement unit are sitting around drinking coffee, hey - suit yourself !

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    Last edited by Melonie; 01-18-2007 at 04:14 AM.

  15. #15
    Featured Member scorpio's Avatar
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    Default Re: Home buying

    >>>>And just how exactly will the IRS know that a home was sold if there isn't any automatic reporting from the state property deed / title agencies as you claim ? Those deed registration / title agencies DO make an automatic report to the IRS whenever a new deed / title is registered ... which makes the IRS just as aware of the buyer as of the seller for any item that requires a deed / title to be registered i.e. houses, condos, cars, boats, jetskis, snowmobiles etc. If the sale was financed, the creditor is also included on the deed / title, and that information is passed along to the IRS as well.<<<<

    This is correct and common sense, the rest is your typical paranoid bullshit. But hey, believe it if you want.

    Keep wearing those tinfoil bras!

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