So how does this IRS income verification work?

[BacktoBasics]

Is this strictly to obtain copies of W-2's (completed years) for verification or could a bank conceivably obtain and match a current paycheck stub back to the IRS....say to verify a paycheck stubs year to date accuracy in the middle of April. A friend wants to know.



The Income Verification Express Service (IVES) program is used by mortgage lenders and others within the financial community to confirm the income of a borrower during the processing of a loan application. The IRS provides return transcript, W-2 transcript and 1099 transcript information generally within 2 business days (business day equals 6 a.m. to 2 p.m. local IVES site time) to a third party with the consent of the taxpayer. The transcript information is delivered to a secure mailbox based on information received from a Form 4506-T. A $4.50 fee is imposed on each transcript requested. This service replaced the previous process that required manual pick-up and delivery of transcripts from the seven IRS Return and Income Verification Services (RAIVS) units located across the country.

This service automates the delivery portion of the process. Customers log on to IRS.gov to retrieve their requested transcripts from a secure mailbox located on the e-Services electronic platform. The “front end” of the process remains the same. Customers will need to fax the signed Form 4506-T, Request for Transcript of Tax Return, to the one of the six designated RAIVS units.

[clambake]

couldn't they easily trace it back to the bank that processed it?

[BacktoBasics]

couldn't they easily trace it back to the bank that processed it?
Wouldn't that be private information. You can't go into my account to check my deposits and what about the people who cash their checks at check cashing places.

[clambake]

maybe i'm missing something.......isn't your question about income verification for loan approval?

wouldn't that be like giving your permission to verify?

[BushDynasty]

Wouldn't that be private information. You can't go into my account to check my deposits and what about the people who cash their checks at check cashing places.

Heh-heh, maybe you can't.

[BacktoBasics]

maybe i'm missing something.......isn't your question about income verification for loan approval?

wouldn't that be like giving your permission to verify?
Well most places request that you bring in a current paycheck stub and your last two years of W-2's. According to that blurb a bank or company can request a copy of a 1099 or W-2 directly from the IRS as verification (to compare). The question is can a business or bank request proof mid-year of someone's current standing year to date. Basically to verify the accuracy of a paycheck stub.

[TDMVPDPOY]

Wouldn't that be private information. You can't go into my account to check my deposits and what about the people who cash their checks at check cashing places.

tell that to the bank tellers/ clerks who process it, most of the time they look at it, but those sort of information if leaked....they could be in real trouble with authorities and employer...something like a fine, jail time and make ur life miserable. I know cause i once held a position processing financial records...

most of the time the IRS system is linked up with most financial instituitions cause of ur IRS reference number....they could just cross-check if see ur earnings and shit whether ur paying taxes, or disclosing enough information....

[TDMVPDPOY]

Well most places request that you bring in a current paycheck stub and your last two years of W-2's. According to that blurb a bank or company can request a copy of a 1099 or W-2 directly from the IRS as verification (to compare). The question is can a business or bank request proof mid-year of someone's current standing year to date. Basically to verify the accuracy of a paycheck stub.

its in most accounting software payroll logs :D

[BacktoBasics]

its in most accounting software payroll logs :D
Perhaps my friend should have check stubs without any withholding's (like he was contracted or payed a flat salary monthly for the work). Since the 1099 comes at the end of the year there is no way to verify its accuracy outside of a phone call to the place of employment. Unless.....a bank is leary of considering income sans withholding's.

[I.R.S.]

Perhaps my friend should have check stubs without any withholding's (like he was contracted or payed a flat salary monthly for the work). Since the 1099 comes at the end of the year there is no way to verify its accuracy outside of a phone call to the place of employment. Unless.....a bank is leary of considering income sans withholding's.

Quarterly reports must also be filed.

[BacktoBasics]

Quarterly reports must also be filed.Damn you IRS.

[TDMVPDPOY]

Damn you IRS.

doesnt that depend on how much you earn a year?, whether ur doin monthlys, quarters or half-yearlies......

anyway fuck that if u know how to fill those forms, then you dont need to pay fees for an accountant to fill them...they cost a fair bit too

[CubanMustGo]

In the US you file quarterly estimated tax payments via form 1040-ES. No accountant is mandated, it's a pretty simple process. My wife works as a contractor and we file them for her all the time.

If you're an employee (as opposed to a contractor) taxes must be deducted from every check - unless you claim so many dependents that your net tax liability is zero. Better not owe money at the end of the year, tho, or you get hit with an underpayment penalty.

[JoeChalupa]

In the US you file quarterly estimated tax payments via form 1040-ES. No accountant is mandated, it's a pretty simple process. My wife works as a contractor and we file them for her all the time.

If you're an employee (as opposed to a contractor) taxes must be deducted from every check - unless you claim so many dependents that your net tax liability is zero. Better not owe money at the end of the year, tho, or you get hit with an underpayment penalty.

Taxes do NOT have be w/held if the EE fills out their W-4 and requests no taxes be w/held. Taxable wages will be recorded but no taxes will be w/held. I see it all the time.

[TDMVPDPOY]

yeh most of the time if you know what you are doin, you dont need an accountant.

but if ur not qualified or registered to fill one of them forms and something is fuckd up then expect IRS to come chasing ur payers ass, who then would come chasing ur ass for recoupment of fines

[CubanMustGo]

Taxes do NOT have be w/held if the EE fills out their W-4 and requests no taxes be w/held. Taxable wages will be recorded but no taxes will be w/held. I see it all the time.

Like I said, if you claim enough dependents (on the W-4) your net tax liability is zero, which means no taxes will be withheld. There is no box that says "withhold zero tax," you have to claim the exemptions.

The field is actually called "allowances" and includes child tax care credits, dependents, other credits.

http://www.irs.gov/pub/irs-pdf/fw4.pdf

[TDMVPDPOY]

Like I said, if you claim enough dependents (on the W-4) your net tax liability is zero, which means no taxes will be withheld. There is no box that says "withhold zero tax," you have to claim the exemptions.

The field is actually called "allowances" and includes child tax care credits, dependents, other credits.

http://www.irs.gov/pub/irs-pdf/fw4.pdf

claimin all that shit, dont you have to go through social security?

[CubanMustGo]

There's no getting around SS tax, at least not until you make more than $100K. If you're self-employed, you get to pay twice as much. :depressed

And you always pay Medicare tax no matter how much you make.

[ploto]

I think the question is whether or not there is a way for the lender to verify through the IRS the year-to-date income to guarantee the pay stubs presented are not fraudulent.

[Das Texan]

you dont have to pay quarterly if you are self employed.


the penalty isnt that much if you manage your money correctly as opposed to other means of making money that is.

[CubanMustGo]

Topic 306 - Penalty for Underpayment of Estimated Tax

The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay enough tax, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will have paid enough tax to avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special rules for farmers and fishermen. Please refer to Publication 505, Tax Withholding and Estimated Tax, for additional information.

Generally, the payments should be made in four equal amounts to avoid a penalty. However, if you made unequal payments because your income was received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income. Use Form 2210 (PDF), Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to see if you owe a penalty for underpaying your estimated tax.

Form 2210: You don't have to pay a penalty if total tax liability is under $1K for the year. Otherwise, you pay a penalty which is basically 3.5% of the amount that should have been withheld/paid via estimated taxes. Self-employment taxes are added when calculating the tax liability.

[BacktoBasics]

I think the question is whether or not there is a way for the lender to verify through the IRS the year-to-date income to guarantee the pay stubs presented are not fraudulent.That's correct and has essentially yet to be answered.