The Edith Principal: Cash Income and Credit

You're self employed.  You pay your bills on time and live OK.  You pay a lot of your bills with money orders or cash..  Your pay stubs may be non-existant or may not tell the whole story.  Now, you want to buy a car or a house.  The credit union or bank asks you for income verification and copies of tax returns. 

Getting the picture?? 

If you are a law abiding person, your tax returns will show your correct income and this will help, but you will still need records that support the information on the returns.

Keep records of all cash received and all expenditures. 

How detailed?  ?  Assume your wife or husband (or an IRS agent) is going to ask you where the money went and act accordingly.

If your tax returns don't tell the complete story, - aside from all issues of legality and without minimizing these issues- you have a problem!  If you've been taking your income "under the table", it is not only illegal, it is ultimately self defeating. 

Suggestion:  Talk to a lawyer and get your act together so that your records reflect your true circumstances.  You can't "save" money on your taxes and expect to use unreported income to support a loan. 

The moral -  you can't have your cake and Edith too.