How Do You Answer Income Questions Once Retired?

[Golden sunsets]

I Have a question for the very knowledgeable folks on this forum regarding how you answer Income questions from various sources (e.g. Credit card applications for new credit, increase in credit card lines of credit on existing accounts, car loan applications, mortgage applications). To give a live example, DH and I receive 1 pension, 2 Social Security monthly payments, and 1 VA disability payment. We have taxable accounts that throw off dividends and interest as well as periodic capital gains, none of which we withdraw from taxable accounts. We also have 2 large IRA's which also generate interest and dividends but which are reinvested. Starting in 2017 however, DH starts RMD's. In 2019, I start RMD's.

So for example in 2016 if completing an app which requests income, would you answer the question as a total of all pensions, SS payments, VA disability payments plus taxable account interest dividends? What about capital gains. And for 2017, would you include the same items as in 2016 plus RMD's for DH and exclude interest and dividends in both IRA's?

[MichaelB]

I use the AGI or taxable income from our most recent tax return.

[aja8888]

I add up all my income sources and just put in the number. Income in tax deferred accounts I don't count, only income subject to taxes or reporting.

RMD income is income subject to reporting and paying tax on.

[W2R]

Quote:

Originally Posted by Golden sunsets I Have a question for the very knowledgeable folks on this forum regarding how you answer Income questions from various sources (e.g. Credit card applications for new credit, increase in credit card lines of credit on existing accounts, car loan applications, mortgage applications).

I can understand your dilemma!

Personally, in my 8th year of retirement I still haven't been in your situation, to tell the truth. TBH I don't ever want another mortgage, car loan, line of credit, or whatever.

I DID apply for one credit card finally, in 2014, just to do something off the wall I guess. Got to try different things in life to stay young. Anyway on that application, IIRC all they wanted was my AGI for the previous year or so. Simple.

When I bought my Dream Home in cash, I showed my real estate man a statement from Vanguard shortly after submitting the offer. He never asked for it but I felt that was the courteous thing to do.

[eta2020]

Dividend Yield + interest + SS + pensions is a number in my head. It may be wrong

[bingybear]

Quote:

Originally Posted by Golden sunsets (e.g. Credit card applications for new credit, increase in credit card lines of credit on existing accounts, car loan applications, mortgage applications).

Guess I'm an odd ball. SS is a ways off, no pensions and RMD is also way off. I just thought I'd not need to do any of these. I could I guess potentially see a mortgage.. maybe.

Maybe I should think about this.

[Bestwifeever]

Our credit card companies keep asking us to update our income so they can invite us to apply more cards, they say. Umm, no, no income updates from us, no invitations to apply for CCs wanted from them. Our credit lines are quite ample already.

If we wanted to borrow money (or wanted more credit cards), we would consider income to be what we reported on April 15.

[RobbieB]

I use SS, interest and dividends.

[braumeister]

Quote:

Originally Posted by MichaelB I use the AGI or taxable income from our most recent tax return.

+1
Simple

[Senator]

Add them up and double (or triple) it. A mortgage company will want verification, so you have to be spot on. All the others are generally on the honor system.

Generally a higher income is better for what you are applying for... Give them a higher income. They cannot verify it without your knowledge.

[Alan]

I had to show income earlier this year when leasing a house in the UK so I simply provided proof of my 2 US pensions knowing that would be sufficient. If I needed to show higher income I would add in Dividends and Interest from the previous year.

[pb4uski]

Similar problem here except no pension (until just recently) and no SS yet. I use tax return income, which includes taxable account interest and dividends, capital gains and pension (which are Roth conversions).... while I would concede that Roth conversions are just moving money from the right pocket to the left pocket (or is it the other way around?), the U.S. government considers it to be income.... so who am I to argue with them?

At least if someone asks I have a reasonable basis for what I am telling them and can even show them the numbers from my prior tax returns if they want it.

[audreyh1]

Quote:

Originally Posted by MichaelB I use the AGI or taxable income from our most recent tax return.

Exactly!

And that's what you can back up with your tax docs if you ever have to "prove" it like for a mortgage.

[Alan]

Quote:

Originally Posted by audreyh1 Exactly! And that's what you can back up with your tax docs if you ever have to "prove" it like for a mortgage.

We are currently in the process of buying a house, for cash, and had to produce current brokerage statements to prove we had the funds to buy the house. I also provided pension statements to show that we also had other income streams.

[Fermion]

Just make up a number, they won't check.

[GrayHare]

The instructions with most credit card applications state you should include only income you wish them to consider for repayment purposes.

[FUEGO]

$40,000. That's what I usually say. It's about what we spend and about what I'm targeting for my AGI each year, so I can back it up with tax forms. Don't put a lot of thought into it beyond that.

[NW-Bound]

Income Loan? I don't need no stinkin' income loan.

[youbet]

Quote:

Originally Posted by MichaelB I use the AGI or taxable income from our most recent tax return.

There ya go......... No need to make it more complicated than it is. I believe MichaelB's method would work well for most scenarios.

[youbet]

Quote:

Originally Posted by Alan We are currently in the process of buying a house, for cash, and had to produce current brokerage statements to prove we had the funds to buy the house. I also provided pension statements to show that we also had other income streams.

Was this early in the process Alan? It seems like if you had already made an offer and it was accepted, you could just give them a check in lieu of proving you'd be able to give them a check later. Or was it a case where the seller still had some loops to jump through and you didn't want to give them a check until seller completed their to-do's?