Traditionally, federal income taxes must be filed with the IRS on, or before, April 15 each year. The date has become such a part of U.S. culture that many people simply call it “Tax Day”.

This year, however, for the 3rd time in 7 years, your federal income taxes will not be due April 15. Instead, because of a combination of the calendar, a holiday, and tax law, Tax Day 2012 is delayed until Tuesday, April 17.

You will have two extra days to prepare and file your federal income taxes this year.

Here’s why.

First, April 15 is a Sunday and all federal offices are closed on Sundays. This means that that taxes can’t be filed on April 15, as regularly scheduled. Rather, the tax due date should roll over to the first available business day — Monday.

However, Monday, April 16 is Emancipation Day, a holiday in the District of Columbia since 2005.

Emancipation Day honors President Abraham Lincoln’s April 16, 1862 signing of the Compensation Emancipation Act. All of Washington, D.C. is closed for the local holiday — including the offices of the IRS. Taxes can’t be due on this date because there will be nobody at the Internal Revenue Service to receive them.

Therefore, Tax Day rolls over to the next available business day, and that’s Tuesday, April 17. Despite the 2-day change, as a reminder, the deadline to file a federal tax return with extension has not changed. That filing date remains October 15, 2012.

Also, note that most states have chosen to mirror the IRS’ tax deadlines this year even though Emancipation Day is a Washington, D.C-specific. Be sure to check with your accountant to confirm your local filing deadline.

Just the other week, I had an associate tell me that he felt like jumping off a bridge!

“Why the leap of faith, ” I ask.

After 10 minutes of rambling on how he spent 3+ months working on this couple that finally saved up enough money to buy their first home and at the VERY end, had the financing entirely fall apart, he finally came clean and said, “Tommy, I didn’t look at the tax returns. I screwed up bad.”

You bet these people’s house you didn’t, my friend!!!

For all of you “soon-to-be-buyers”, you need to understand how your income is magically deciphered when looked at by mortgage underwriters. It’s not rocket science, but did you know that your Adjusted Gross Income (AGI) can quickly change if not accounted for properly?

Say you are a W-2 employee with a base salary of $65,000 a year. Well to the average mortgage guy, they take that figure, divide by 52 (weeks in year), and multiply by 4 (weeks in month) to come up with a gross monthly income ($5,000) for you to qualify off of.

Bingo, Bango, you’re APPROVED for that $150k home you fell in love with on Saturday!

Not so fast.

What is that you say? You deducted $5k in gas expenses and $1k in cell phone charges (900 numbers apply), in which your employer did not reimburse you on these business expenses? Well believe it or not, that figure is now SUBTRACTED from your AGI (Adjusted Gross Income-shown on page 1 of your IRS FORM 1040) and now the Loan Approval has to be completely reworked.

If you don’t know what a 1040 is, either you’re reading this in jail or new to the country. Welcome! Dance of Joy time!

Well what the 1040 basically shows is the amount that you made in that calendar year, however, it can be increased or decreased depending on the rest of your tax schedules.

This is where our “Mortgage Wizard” went wrong!

99% of lenders these days will order your tax returns prior to closing, and if anything like this pops up and screws up your original approval, stick a fork in the loan, you’re done with!

So what’s the moral of the story?

2 things:

1. Make sure to give your tax returns (last 2 years) to your loan officer and make sure you reference this article so this doesn’t happen to YOU.
2. If you are planning on buying a house in the near future, don’t deduct as much as you normally do tax time. While it’s a great feeling getting a nice fat check back, it’s an even better feeling owning a home.

Its CRUCIAL to be able to calculate income correctly and UP FRONT at the time of application because this can save everyone a lot of money and headaches when done correctly.

Individual Tax Returns (IRS Form 1040).

The amount shown on the IRS Form 1040 as “adjusted gross income” either must be increased or decreased, based on the lender’s analysis of the individual tax returns and any related tax schedules. Particular attention must be paid to the following:

a. Wages, Salaries, and Tips. An amount shown under this heading may indicate that the individual is a salaried employee of a corporation or has other sources of income. It also may indicate that the spouse is employed, in which case the income must be subtracted from the adjusted gross income in the analysis.

b. Business Income or Loss (from Schedule C). The sole proprietorship income calculated on Schedule C is business income. Depreciation or depletion may be added back to adjusted gross income.

c. Rents, Royalties, Partnerships, Etc. (from Schedule E). Any income received from rental properties or royalties may be used as income after adding back any depreciation shown on Schedule E.

d. Capital Gain or Loss (from Schedule D). This transaction generally occurs only one time, and it should not be considered in determining effective income. However, if the business has a constant turnover of assets resulting in gains or losses, the capital gain or loss may be considered in determining the income, provided the borrower has at least three years’ tax returns evidencing capital gains. An example includes an individual who purchases old houses, remodels them, and sells them for a profit.

e. Interest and Dividend Income (from Schedule B). This income, which is taxable and tax-exempt, may be added back to the adjusted gross income only if it has been received for the past two years and is expected to continue. (If the interest-bearing asset will be liquidated as a source of the cash investment, the lender must adjust accordingly.)

f. Farm Income or Loss (from Schedule F). Any depreciation shown on Schedule F may be added back to the adjusted gross income.

g. IRA Distributions, Pensions, Annuities, and Social Security Benefits. The nontaxable portion of these items may be added back to the adjusted gross income, if the income is expected to continue for the first three years of the mortgage.

h. Adjustments to Income. Certain adjustments to income shown on the IRS Form 1040 may be added back to the adjusted gross income. Among these adjustments are IRA and Keogh retirement deductions, penalties on early withdrawal of savings, health insurance deductions, and alimony payments.

i. Employee Business Expenses. These expenses are actual cash expenses that must be deducted from the borrower’s adjusted gross income.