Calculating Income from 1040, K1 & 1120S (S Corporation)

[Pages:50]Calculating Income from 1040, K1 & 1120S (S Corporation)

Tax Return Review Series December 2017

Genworth Mortgage Insurance Corporation

?2017 Genworth Financial, Inc. All rights reserved.

Objective

Understand the meaning of "Self Employed" Learn to use Fannie Mae's Form 1084 to calculate supportable income using tax returns. We will also include a brief overview of Freddie Mac Guidelines Complete Fannie Mae's 1084

? W2 from 1120S (Section 1) ? 1120S K1 Review (Section 9) ? 1120S Review (Section 10)

Complete the Solvency Calculator

? Solvency/Liquidity Test

Tax return Series Form 1120 with K1

Fannie Mae Updates

SEL 2015-09

? Cash Flow Analysis Form updated ? Sections of Chapter B3-3-2 for Self-

Employed Borrowers updated

? Evidence of liquidity if no distributions made from partnerships or S corps

? DU updated to allow one year personal and business tax returns for certain case files

? Changes effective for applications dated February 1, 2016

Tax return Series Form 1120 with K1

2016 Fannie Mae Updates

SEL 2016-05

? Updates to Business Income

? Eliminate requirement to confirm borrower has access to income

? Guidance for methods lenders may use to determine adequate business liquidity when liquidity assessment is required

? Verbal verifications of employment for a self-employed borrower can be obtained within 120 days prior to note date

? Chapter B3-3-1.07, 09 and B3-3-2 of the Selling Guide have been updated

? Effective on or before October 1, 2016 but lenders and implement immediately

Tax return Series Form 1120 with K1

S Corporation Income

Tax return Series Form 1120 with K1

Not Using Self Employed Income

Tax return Series Form 1120 with K1

Not Using Self Employed Income

When Do We Have To Tell Loan Product Advisor Our Borrower Is SelfEmployed?

Tax return Series Form 1120 with K1

Freddie Mac Updates

Tax return Series Form 1120 with K1

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