Tulsa Mortgage : Podcast 21 – Part 1
Steve: This is episode number 21 of the Steve ‘N Tyler show [music].
Announcer: Welcome to the Steve ‘N Tyler show with stevecurrington.com and Tyler Wagner.
Steve: Tulsa Mortgage Who negotiated the contract for you?
Steve: That is very smart, good for you man.
Announcer: They’re talking about everything you need to know about mortgages, home loans and more. Nobody knows mortgages like these two. Get ready because here’s Steve ‘N Tyler.
Steve: What’s up Tyler?
Tyler: Chilling like a villain Steve.
Steve: Chilling like a villain [music]. We’re going to start off with a little Let It Weep that’s four minutes and 35 seconds of Let It Weep by the way. If you hit the Let it Weep button, four minutes 35 seconds Let it Weep.
Tyler: That’s the whole song [music].
Steve: That’s called the Salaga, maybe it’s galaga
Steve: Anyway we’re talking about Tulsa mortgage.
Tyler: Columbia mortgage.
Steve: Alamosa mortgage.
Tyler: Colorado Springs mortgage.
Steve: Farmington mortgage.
Tyler: Pueblo mortgage.
Steve: Did we say Columbia mortgage?
Tyler: Yes. Tulsa did we say Tulsa?
Steve: Tulsa mortgages, yes. This is our 21st podcast.
Tyler: My lucky number, 21.
Steve: 21 is your lucky number?
Steve: That’s not uncommon. Does it make sense?
Steve: That means it’s common. Because a lot of people- that’s like saying your lucky number is seven, because 21 is seven times three. So seven, seven, seven is your lucky number.
Tyler: Well whose lucky number is 10,035?
Steve: That’s my point. Yours is 21, my lucky number is four, which is how many of these we’re recording today?
Tulsa Mortgage Steve: In case anybody didn’t know, just kidding. We do all these once at a time in talking. Today we’re talking about how self-employment income is documented. Oh my gosh, this bag of worms, and next time we come on we’re going to talk about W-2 income. But holly jeez, it’s time to [music] break it down.
Steve: Let’s go through Tyler, please tell me if I’m self-employed what do you need? Go ahead,
Tyler: A lot-
Steve: I’m going to step aside for about 16 minutes while you tell me what do you need.
Tulsa Mortgage Tyler: Going to need a couple of years of tax returns and on those tax returns I’m looking for, if you’ve got a 1040 schedule C, schedule E, do you have an 1120S? Do you have a K1? Do you file a 1065?
Steve: Oh my gosh.
Tyler: That’s a lot of stuff to look for.
Tulsa Mortgage Steve: Do you also have interest income or dividend income? Do you have 2106 expenses? Does anybody even know what 2106 expenses are? Rob Napton does, he’s a mortgage guy up there in Florida. 2106 expenses get this.
This happened recently; a guy works as an airplane mechanic, makes 12 bucks an hour, which I don’t think is very much for an airplane mechanic but whatever. He pretty much works 20 hours of overtime a week which is crazy, and he gets like time and a half and a half, so he makes like 30 bucks an hour for his overtime. So he makes pretty good money and then, on top of that he gets a per diem, remember this guy?
Tyler: What’s per Diem?
Steve: Per Diem is like he has to travel for work, so they’re giving him like a per day cost of living. So he’s like, we take his app. I remember this because I was in the- where was I? I was in the Denver airport when I took this application; I remember Denver mortgage. I’ll add that to the little mix there Tyler to begin. So here I am sitting there taking this app and the wife says she makes $10,000 a month. Awesome, one of those pay stubs or anything like that here, right? He’s not self-employed, right? He’s not a self-employed guy, so he makes 10 grand a month, happy days. But he has 2106 expenses, so when we get his tax returns on his schedule A, it lists job-related expenses that are not reimbursed by the employer. What does that mean Tyler?
Tulsa Mortgage Tyler: Means that, I don’t know. He could have bought tools or-
Steve: Yes he could have had tools he could have had–he’s a mechanic, so he probably has some tool expense, he might have uniform expense, he might have– name it. He’s getting per diem so he might have– he’s got to travel for work, he’s got a hotel expense, he’s got stuff like that that may be his employer didn’t reimburse him for. Maybe his employer reimbursed him for $50 a day for a hotel, but he wanted a nice hotel, so he stayed in one that was 100 bucks a day. Right, you’ve done that before?
Steve: So you know the whole deal, right? Or you could stay in one of those $25 and make a little bit of money so just depends but in this guy’s case; we call this double dipping. He was double dipping because all of his job-related expenses he was reimbursed for through his per diem, but he reported to the IRS that he wasn’t and so he claimed those again. Here’s where the problem lies in his case is I have to subtract the expense for his job-related expenses not reimbursed by his employer as reported on his tax return from his total income.
You take a guy who– I couldn’t count his per diem anyway because that’s what per diem is instead of reimbursed expenses, so it’s not income. All I could count was his hourly and his overtime. I had to reduce his income per year by $25,000. He made 50 and after his expenses, he made 25 and guess what, do you remember that loan we got up on the closed loans board?
Steve: Did we make any commission on that loan?
Tulsa Mortgage Steve: Did we work our tail off on that loan?
Steve: Just makes me so mad. It is what it is we’re not mad at the person; we’re mad at the situation may be, but that’s why when it comes to calculating your income especially when you’re self-employed, it isn’t that easy. Hey, Keith and McCavers what’s happening? Keith are down in– I was going to say Oklahoma City, but it’s Edmond. Keith and McCavers are down in Edmond. Go home loan people; we got Rob Napton watching and Eric Bum. I tell you Eric Bum commented on our last video that he doesn’t want to watch anything except for pizza, so I tied all this podcast with pizza with Eric Bum. Podcast, pizza with Eric Bum so that’s the whole reason in case you may be wondering why we said podcast with pizza.
Tyler: Sound’s strange, who wants to watch pizza? Like he just want to look at a pizza.
Steve: Kevin Carrington obviously does, in addition to donuts he eats pizza.
Tulsa Mortgage Tyler: Nice [laughs] Isn’t he the flying pig?
Steve: Yes, Kevin, good to see you, bro. [laughs] I can’t even tell you what Eric Bum just said, he said pizza something.
Tyler: Pizza is pizza [laughs]. So how often does this happen? I’m going to say quite often. The income a self-employed person tells a lender that they make a year is normally vastly different than what we can use when we qualify them.
Steve: He dropped the qualify bomb. What?
Tyler: Somebody calls and says they make 100 grand a year. Great, let me see your taxes.
Steve: Yes I’ve got a guy right now nice guy, and he’s like, “I make 200 grand a year.”
“Not really according to your taxes you make 22,000.” Look, that’s the downside of self-employment. It just is – the benefit is people always say,
“You get to write everything off.” Yes, you get to write it all off. It doesn’t mean that you get the money back. That’s what always cranks me up people are like,
“Oh man, you can write this off.” Well, I have to spend the money it just maybe goes into a non-taxable income bracket. It’s not like I get free dinner. Like,
Tulsa Mortgage “I bought dinner at Charleston’s for everyone, and I get to write it off.” That means the 100 bucks I spent on dinner, the IRS just gives it back to me at the end of the year.