I know from experience that certain gambling winnings and stock purchases will be reported to the IRS for you, which makes it very important that they are reported correctly when preparing your taxes.

But what about loan applications or large purchases (not in cash)? If I apply for a loan on a home or a car, do the banks submit any info to the IRS?

For example, if I buy a house this month but lose my job in three months I will make less income for the year than I stated on my loan application. Would this raise any red flags?

And yes I am paranoid and yes I have too much time on my hands.

 

no, i don't think red flags would be raised.

and, no, i don't think that creditors submit info to the irs.

 

Any cash transaction over i Think 10k is reported. So the government has record of your home purchase and about 1000 billion other transactions and they could care less. You making less than what you did when you purchased your home isn't actionable by your mortgage company so long as you keep makeing the payments. However your credit rating will take a plunge because of your income/debt ratio.

 

But is a loan considered a "cash transaction?"

Before my tax preparer did my taxes I received a worksheet from her that asked a set of questions and two of those questions were "have you purchased any property in the past year" and "have you purchased a car, boat, motorcycle, or 4-wheeler in the past year?" So I wasn't sure if now large purchases need to be reported or declared.

I've heard of "lifestyle audits" in the past. I just don't want to raise any red flags.

 

allkings - i think there is a form (Form 4506) that you sign when completing a mortgage (if the bank requires) that allows them to go to the IRS to compare your numbers...... so.... i believe there is a possibility that they could check on you.....

but...you didn't just dummy up some numbers on the original application..... you lost your job (in the situation you gave).... if you did dummy up some numbers....time to leave the country.


**************THIS IS NOT A BLANKET STATEMENT*******************

 

The purchase queation is to see if you have any possible DEDUCTIONS not liability. So if you made a fortune selling heroin on the black market just don't take a deduction for closing costs etc. If you just lost your job and find yourself making less it doesn't matter to anyone, well legally at least.

 

The IRS won't care. You get income, you pay them taxes. Doesn't matter if your income is $10k to $10 million. They just want their share.

Your mortgage company probably will have a serious issue - because it might mean you won't be able to make your payments.