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Qualifying Borrowers Using Personal Tax Returns Part 1: Schedules B & C

Jan 24 2:00 PM - Jan 24, 2023 3:30 PM
Jan 24, 2023 2:00 PM - 3:30 PM
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Is taxable income different than cash flow? Most often, the answer is a big “YES!” Using tax returns to determine borrowers’ cash flow to service their debt is as challenging a sever. Join us to learn the latest techniques to help you sort out all that tax data and find exactly the information you need.

Learning Objectives

  • Turn a tax return into a borrower’s cash flow report
  • Understand the concept of using recurring incomes as cash flow – and ignoring the rest
  • Determine cash flows from interest-earning investments and dividend-producing investments, etc. from Schedule B: Interest and Dividends
  • Correct the unreliable pass-through interest and dividend incomes earned from partnerships and S corporations with Schedule Bo Note: partnership and S corp supplemental income will be covered in Part 2
  • Identify hidden incomes and a hidden expense in a sole proprietorship via Schedule C

Tax returns don’t show cash flow; they show taxable income. What you need to know is cash flow because that is how your loan is paid back. With the process outlined in this session and the free Lenders Tax Analyzer© software each registrant receives, you will gain an easy, reliable method to convert a borrower’s personal tax return (Form 1040) into a borrower’s cash flow statement.

This is Part 1 of a two-part series. In Part 1, you will learn to cash flow the front page of Form 1040, Schedule B (interest and dividend incomes) and Schedule C (sole proprietorship incomes). When you finish this session, you will be able do a little ‘magic’ and convert taxable incomes into cash flows that you can plug into your credit scoring model, your debt-to-income ratio, or your disposable income calculation.

(Note:This session is designed for consumer and commercial lenders. This method does not follow Fannie,Freddie, or QM rules used in mortgage lending.)



Tim Harrington, CPA, TEAM Resources

Tim Harrington is Founder and CEO of TEAM Resources and has been a financial institution consultant for over 29 years. Tim has advised lenders on verifying income from tax returns since 1992, and consults with financial institutions nationwide on issues of strategy, profitability, and board governance. He speaks at nationwide conferences and has presented in Canada, Mexico, Puerto Rico, Jamaica, and the Virgin Islands. Tim is the author of the popular software, Lenders Tax Analyzer. In addition, his book “Eisenhower on Enlightened Leadership” has been used by management teams nationwide to improve leadership skills. He did his undergraduate studies at Gonzaga University and graduate studies at the University of Washington.




Your registration includes unlimited locations, making it easier to share and learn with remote staff.

Please note: You may share the link with others at your credit union, however the confirmation will be sent to one primary contact at your credit union. It will be up to the primary contact to share the material with others.

Additional Info

Event Type

On-Demand Webinar

Topics Covered

  • On-Demand Webinars
  • Operations
  • Member Service
  • Lending & Collections
  • Executive Management