Mortgage Grapevine

Grossing up Social Security Question

Ok, generally (with conforming lenders) you can gross up social security income. My question is what (besides lender's guidelines) would prevent you from grossing up social security income?

My boss has a file with a lender, who requested tax returns to document receipt of pension income. On the 1040 it has social security income listed as follows:

20a Social Security benefits $18582
20b Taxable amount (see page 27) $15795

So what if any portion of the social security is able to be grossed up? The non taxable amount ($2787)? If that is the case then why do most lenders allow you to gross up the entire amount? Generally I'm not submitting tax returns, just W-2s and paystubs, so is this the problem here? Any advice would be appreciated. Thanks.
by OHlo61 September 20, 2007 12:00 AM

Did they have other income besides the SS? I think a part of the SS benefits can be taxed if gross income exceeds a certain amount.

You can gross up the non-taxable amount.
by Old Hand September 20, 2007 12:00 AM

Old Hand,
Yes, the total W-2d income was approximately $55,000 plus $15,000 for pensions and then some miscellaneous that came out to a Total Income of 90K+.

So from your understanding I could gross up the $2787 (difference between total SSI and taxable amount)? Thanks for the input.
by OHlo61 September 20, 2007 12:00 AM

Yes. If they give you a hard time just tell them I said it was okay. :)
by Old Hand September 20, 2007 12:00 AM

First, you have to find out WHY they are receiving SS income, are they of retirement age, will it continue 3 years? IF yes, you would obtain the current 2007 SS Award letter (evidence of receipt possibly) and gross up either the acceptable 125% or get a letter from their CPA stating their tax bracket if higher, use that.

You can gross up non-taxable income.
by Cindeerella September 20, 2007 12:00 AM


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