How Do You Answer Income Questions Once Retired?

[Danmar]

Pensions, and dividends. Interest is immaterial and cap gains may not be repeated. Hardly ever have to do this. Had to show we had enough cash to buy our last house in Arizona.

 

[RE2Boys]

I usually report the approximate total of taxable income that is regular. For me, a pension and an approximation of expected interest and dividends. I don't include what I may or may not make from my seasonal job, or my wife's activities.

Of course, other than credit card applications, I haven't had a car or house loan since 1994.

The 1040 AGI is essentially whatever I want it to be, usually at top of 15% bracket due to cap gains or Roth conversions.

 

[karen1972]

The only issue is likely mortgage, as I was told to leave off anything that wasn't required to be proved, since the more you state, the more you need to prove even when you don't need it. Many underwriters don't like dividends and certainly don't take capital gains (since they vary so much year to year). Pensions are fine if you have been receiving them for a year or so direct into a verifiable account.. basically when it comes to mortgage you better have all your paperwork handy and be able to prove it is sustainable for anything you write down. Personally, I knew this is stupid since my honey wrote down his paycheck and we knew he wouldn't be at that job very long, but that's the way it works. ie his paycheck was worth more than the million in the bank to the underwriter.

I have always assumed for everything else AGI is fine since such small credit can easily be paid off.

 

[kcowan]

For a bank credit card, we used our last income tax submission. For our permanent residence visa in Mexico we stated that we had slightly more than the minimum needed in a letter to immigration. We just do the minimum needed in each case.

 

[Lake161]

I use my annual spend, not my taxable income.

I am pulling from my taxable accounts right now, so I only show cap gains (which are a net loss due to TLH) and dividends (too low to look good on a credit application) in my AGI.

I'm using rewards cards to pay most bills, and sign up for a new one every few months to get the sign on bonuses. I've never been asked to document my income.

 

[Golden sunsets]

Thanks all. We have no debt either but applied for two new credit cards this year to take advantage of better rewards and no annual fees, thus I had to answer the income question. I also requested an increase in credit limit on one card so that the closure of other cards would not lower our overall credit limits. But I haven't been using AGI because it does not include DH's substantial VA disability pension.


Sent from my iPad using Early Retirement Forum

 

[ls99]

Timely topic. I keep getting CC offer from USAA. I don't need it, but might apply just to see if they are serious about my "preffered" status.

 

[Alan]

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?

It's a short chain. The seller has to buy a house and the house he is buying has an occupant who is moving to another city to be near his son. ( I think he is about 90 and will be moving in with his son while he finds somewhere else).

We've had a survey done and our lawyer has now completed searches on the property we are buying, has received some documents on construction that was done and is waiting on an electrical safety certificate following replacement of a fuse/breaker box. I assume they are having similar searches and surveys done on the property they are buying.

The goal is exchange of contracts first week of January followed by closing on January 18th. 10% deposit required on exchange of contracts, otherwise a copy of brokerage and bank statements was sufficient to assure ability to pay.

 

[medved]

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

You might be right that they won't check. But I think it is better not to commit fraud on an application for credit.

 

[RobbieB]

You and me both.

 

[fritz]

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?

It's a short chain. The seller has to buy a house and the house he is buying has an occupant who is moving to another city to be near his son. ( I think he is about 90 and will be moving in with his son while he finds somewhere else).

We've had a survey done and our lawyer has now completed searches on the property we are buying, has received some documents on construction that was done and is waiting on an electrical safety certificate following replacement of a fuse/breaker box. I assume they are having similar searches and surveys done on the property they are buying.

The goal is exchange of contracts first week of January followed by closing on January 18th. 10% deposit required on exchange of contracts, otherwise a copy of brokerage and bank statements was sufficient to assure ability to pay.

We've bought eight homes - five of them for cash in several states, and never had to prove we had the funds with brokerage/bank statements. Just showed up with a cashiers check at the closings. Nothing more than earnest money upfront (believe all were under $10k earnest), and no income verification except for mortgages on the three that weren't all cash purchases. All were typical purchases with realtors on both sides and lawyers handling closings.

 

[old woman]

I don't know what to put so just give a wild guess. I am retired but take money out of different accounts as needed without tracking. First time I was asked was right after I quit working, I wasn't expecting the question so just said I don't know I get SS and have a million invested so I guess about 80K. So this week when I wanted a credit line increased I told them 80K. My investment grow faster but to get a mortgage if I need to prove income they want me to set up automatic withdrawals and have enough to last 5 years. So I will do whatever I want like taking 10K a month until the mortgage settles then stop doing it. I made 93K on investments so far this year but only withdrew 50K so with SS 80K is in the ball park.

 

[scrabbler1]

Last year, I requested an increase in the limit on my main CC. It was pretty low and thought I'd need a boost due to a big hospital bill coming due and I wasn't sure I'd have enough cash on hand to pay it. (I could always write a check from my bund fund account.)


I don't remember if my bank asked me for my current income. They did want to see a credit report. I had locked it after the BCBS hacking but I had the info needed to unlock it temporarily so they could look at it. During a conference call including me, the bank, and credit reporting agency, I gave them my PIN, they unlocked it, and the bank granted me the increase.

 

[braumeister]

We've had a survey done and our lawyer has now completed searches on the property we are buying

Wow! It just occurred to me that title searches must be a nightmare in Europe. They take long enough in this country where they only have to go back a couple of centuries or so, but OMG how deep do they search where you live?

 

[Alan]

We've bought eight homes - five of them for cash in several states, and never had to prove we had the funds with brokerage/bank statements. Just showed up with a cashiers check at the closings. Nothing more than earnest money upfront (believe all were under $10k earnest), and no income verification except for mortgages on the three that weren't all cash purchases. All were typical purchases with realtors on both sides and lawyers handling closings.

Financial regulations in the U.K. Must be different than in the USA, perhaps when it comes to money laundering the U.K. is more careful as to determining the source of the money. Anyway, it was easy to produce statements to show the existence and source of the money and no deposit money is required to be paid prior to exchange of contracts which is only about 2 weeks prior to closing when the money is actually handed over. (This is done electronically, you never actually meet up together on the day holding checks or cash). When we sold our house in the USA we were amazed to walk away with a cashiers check worth almost a quarter of a million dollars. A cashiers check is as good as cash I think so we were very nervous until we got to our bank to deposit it.

Remember also that we have been out of the country for 29 years and therefore have no credit score or other U.K. financial history.

 

[Alan]

Wow! It just occurred to me that title searches must be a nightmare in Europe. They take long enough in this country where they only have to go back a couple of centuries or so, but OMG how deep do they search where you live?

Indeed. In our case we will be a 10 minute walk away from a 13th century Priory and 15th century church (The church is still active, our children were baptized there and my 8 greats grandfather was married there).

I think the searches are going to be similar to those done in the USA. Proof of the land being owned by the sellers, with boundaries defined, mineral rights, any access rights for buried sewers, water pipes, utilities, planning permission for any buildings and extensions etc.

 

[fritz]

Financial regulations in the U.K. Must be different than in the USA, perhaps when it comes to money laundering the U.K. is more careful as to determining the source of the money. Anyway, it was easy to produce statements to show the existence and source of the money and no deposit money is required to be paid prior to exchange of contracts which is only about 2 weeks prior to closing when the money is actually handed over. (This is done electronically, you never actually meet up together on the day holding checks or cash). When we sold our house in the USA we were amazed to walk away with a cashiers check worth almost a quarter of a million dollars. A cashiers check is as good as cash I think so we were very nervous until we got to our bank to deposit it.

Remember also that we have been out of the country for 29 years and therefore have no credit score or other U.K. financial history.

Showing up with a cashier's check on the day of closing is preferable to wiring the funds to a title company beforehand - especially when dealing with new home builders (our 5 cash purchases). It gives you the opportunity to stop the closing if necessary, or to negotiate on unfinished items discovered at the final walk-through. Have had things not go smoothly at closings with several builders, and negotiated withholding of funds (by title company) until items were completed. Gives builder incentive to return your calls so they can get you to sign off on work completed, and retrieve final payments from title company. I also want to see a title company check for the agreed upon amount before signing off on my property.

 

[grasshopper]

I just state the top of the 15% tax bracket, because I always take LTCG or do Roth conversions to the top anyway. Plus it is a easy number to remember every year.

 

[Alan]

Showing up with a cashier's check on the day of closing is preferable to wiring the funds to a title company beforehand - especially when dealing with new home builders (our 5 cash purchases). It gives you the opportunity to stop the closing if necessary, or to negotiate on unfinished items discovered at the final walk-through. Have had things not go smoothly at closings with several builders, and negotiated withholding of funds (by title company) until items were completed. Gives builder incentive to return your calls so they can get you to sign off on work completed, and retrieve final payments from title company. I also want to see a title company check for the agreed upon amount before signing off on my property.

In the UK you don't exchange contracts until you are satisfied everything has been completed to your satisfaction. I can't imagine going into closing day with the possibility of work still outstanding. Usually mortgages are involved and the bank wants a full sign-off before contracts are exchanged and a deposit put down, then there is a couple of weeks for monies to be received by the law firms prior to closing day.

Different systems, even within the UK. When we moved to Scotland and had a house to sell in England and one to buy in Scotland we had to employ 2 law firms because the laws and house buying/selling processes are different, so English lawyers can't practice in Scotland and vise-versa.

 

[fritz]

In the UK you don't exchange contracts until you are satisfied everything has been completed to your satisfaction. I can't imagine going into closing day with the possibility of work still outstanding. Usually mortgages are involved and the bank wants a full sign-off before contracts are exchanged and a deposit put down, then there is a couple of weeks for monies to be received by the law firms prior to closing day.

Different systems, even within the UK. When we moved to Scotland and had a house to sell in England and one to buy in Scotland we had to employ 2 law firms because the laws and house buying/selling processes are different, so English lawyers can't practice in Scotland and vise-versa.

I learned my lesson with our very first home purchase. Had the unfortunate luck of purchasing from the battling Browns who were so angry with each other, that the court appointed a third lawyer to arbitrate settlement of their property. Luckily I had my brain in gear at the closing and got in writing, details regarding personal property disposition time frame. If I had not done this - I would have been in limbo with getting them to clear out (home was full of personal property). Ended up donating personal property we'd moved to the garage to extend their allotted time frame, and still was threatened with a lawsuit for giving it all away. Thank God I had a documented written disposition time frame filed at the closing, which I more than allowed for with placing everything in the garage for another month.

As for the five new home cash purchases- certain items were not completed (or couldn't be completed) before the closing. Items like landscaping, patios/decks, top coat of a (very long) driveway were not done due to weather/scheduling issues. Most of the builders we worked with were decent at following up with issues, but two custom builders were somewhat difficult to deal with after the closing and was fortunate to have had control of funds for compliance. One national builder's sub didn't apply finish coat on kitchen wood floor under refrigerator and stove (discovered on final walk-through - had just finish coated around them). You never know and things happen (and it's good to have a back up plan/leverage)...

A lot of maneuvering with all of these purchases, but never had to provide proof of funds or our net worth for any of them as previously mentioned. I thought you were in Europe, but wasn't sure. Can see where things are a little different given the difficulty of crossing country boundaries vs. U.S. state boundaries.

 

[Alan]

A lot of maneuvering with all of these purchases, but never had to provide proof of funds or our net worth for any of them as previously mentioned. I thought you were in Europe, but wasn't sure. Can see where things are a little different given the difficulty of crossing country boundaries vs. U.S. state boundaries.

Early in the year we were looking to rent a place in England while living in Texas so had to provide proof of income and undergo a credit check but since we had no credit history in the UK it was a little tricky. (Copies of monthly US pension statements surficed for proof of income).

Yesterday I received an email from the letting agent who had noticed that my UK passport had expired and as the law requires that overseas lessees need to have a current passport on record requested that I email a copy of my new passport to them.

 

[Bflotomny]

There are a number of items that I share only with my Creator; one is my income and the other is my SS number. As far as my income I tell them what they want to hear: 50k or 150k per year what it takes to get the CC.
My SS number is shared only with those who need it my bank & the IRS. Anyone else who requests it usually gets my old military ID number with a digit added to be the same number of spaces as the SS number. I've been doing that for years without issue. Doctors offices have no need for a social security number. Considering the employees of most offices and their rate of pay I consider them a significant risk for ID theft. Same with banks but they communicate with the IRS.

 

[FIRE'd@51]

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

It should be noted that AGI does not include the 15% (or more) SS which is not subject to taxation.

 

[Car-Guy]

I hadn't really thought about it since I don't plan on buying anything that I can't pay cash for. I suspect I would probably just use my latest tax returns total income (line 22).

 

[braumeister]

Doctors offices have no need for a social security number. Considering the employees of most offices and their rate of pay I consider them a significant risk for ID theft. Same with banks but they communicate with the IRS.

Wait until you start Medicare.