Is any portion of your total gross annual income non-taxable?
Dec 13, 2020, 9:41 am
#1
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Is any portion of your total gross annual income non-taxable?
Why does Chase ask if any portion of one's total gross annual income is non-taxable? Why is that significant? What portion is likely to be too much? 10%? 25%? 50%? 100%? What gives?
Dec 13, 2020, 1:39 pm
#3
Join Date: Jul 2007
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They will apply a standard model to derive your discretionary income level and thus place you in the correct credit model. You could have tax-free annuities, court settlements or other non-taxable revenue streams that would throw off this calculation.
Dec 13, 2020, 7:07 pm
#5
Join Date: Aug 2020
Location: Beijing
Posts: 295
I do wonder sometimes if it's an error to state 100 percent as non-taxable on my applications. It's foreign earned income and reported to the IRS, but I've already paid taxes on it so it all qualifies for the FEI exclusion.
Dec 13, 2020, 8:48 pm
#6
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So your income is 100% taxable. Just because you have a FEIE, it does not make your income non-taxable, i.e. FEIE is the tax treatment.
Dec 13, 2020, 11:26 pm
#8
Join Date: Aug 2020
Location: Beijing
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Based on my reading, IRS's definition of taxable income generally means the income that is subject to tax treatment, not you have to pay tax for it.
So your income is 100% taxable. Just because you have a FEIE, it does not make your income non-taxable, i.e. FEIE is the tax treatment.
So your income is 100% taxable. Just because you have a FEIE, it does not make your income non-taxable, i.e. FEIE is the tax treatment.
Dec 14, 2020, 8:26 am
#9
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Yeah, umm, my question has nothing to do with what constitutes taxable vs. non-taxable income. What I don't get is why does that proportion matter to Chase? Let's look at three hypothetical people who have the same total incomes but differing proportions of taxable vs. non-taxable incomes, and who are otherwise indistinguishable.
Alice has 100% taxable income.
Bob has 50% taxable income and 50% non-taxable.
Carol has 100% non-taxable income.
How is Chase likely to react differently to these people? And if it isn't then why does Chase ask the question?
Alice has 100% taxable income.
Bob has 50% taxable income and 50% non-taxable.
Carol has 100% non-taxable income.
How is Chase likely to react differently to these people? And if it isn't then why does Chase ask the question?
Dec 14, 2020, 8:29 am
#10
Join Date: Jan 2003
Posts: 3,784
Yeah, umm, my question has nothing to do with what constitutes taxable vs. non-taxable income. What I don't get is why does that proportion matter to Chase? Let's look at three hypothetical people who have the same total incomes but differing proportions of taxable vs. non-taxable incomes, and who are otherwise indistinguishable.
Alice has 100% taxable income.
Bob has 50% taxable income and 50% non-taxable.
Carol has 100% non-taxable income.
How is Chase likely to react differently to these people?
Alice has 100% taxable income.
Bob has 50% taxable income and 50% non-taxable.
Carol has 100% non-taxable income.
How is Chase likely to react differently to these people?
Dec 14, 2020, 10:36 am
#11
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Yeah, umm, my question has nothing to do with what constitutes taxable vs. non-taxable income. What I don't get is why does that proportion matter to Chase? Let's look at three hypothetical people who have the same total incomes but differing proportions of taxable vs. non-taxable incomes, and who are otherwise indistinguishable.
Alice has 100% taxable income.
Bob has 50% taxable income and 50% non-taxable.
Carol has 100% non-taxable income.
How is Chase likely to react differently to these people? And if it isn't then why does Chase ask the question?
Alice has 100% taxable income.
Bob has 50% taxable income and 50% non-taxable.
Carol has 100% non-taxable income.
How is Chase likely to react differently to these people? And if it isn't then why does Chase ask the question?
Taxable income is not fully available for discretionary spending to the extent non-taxable income may be. Similar to renters versus mortgage-paid, free-and-clear homeowners. So different calculations will be required. That is all.
Last edited by SPN Lifer; Dec 14, 2020 at 10:43 am
Dec 14, 2020, 12:42 pm
#12
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So Chase would rather my sole source of income be $50k annual, non-taxable gifts from my mother for the last 20 years while I live in her basement with moss growing on my north side, versus $50k in taxable paychecks from an employer of 20 years. After all, Mom will live forever whereas continuous employment for two decades is bupkis.
Dec 14, 2020, 1:31 pm
#13
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I have a different reading on this than SPN Lifer.
Under ECOA, a financial institution can't discriminate based on the source of income if all or any portion come from public assistance program (15 U.S.C. §1691(a)(2)). But at the same time, a financial institution is allowed to ask about the income to make certain determinations (15 U.S.C. §1691(b)(2)).
So to me - Chase has created a new formula for credit line determination, which factors taxable income and non-taxable income.
Other than that, I don't see any other plausible explanation.
Under ECOA, a financial institution can't discriminate based on the source of income if all or any portion come from public assistance program (15 U.S.C. §1691(a)(2)). But at the same time, a financial institution is allowed to ask about the income to make certain determinations (15 U.S.C. §1691(b)(2)).
So to me - Chase has created a new formula for credit line determination, which factors taxable income and non-taxable income.
Other than that, I don't see any other plausible explanation.
Dec 15, 2020, 12:00 pm
#14
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I theorize the question has nothing to do with discretionary spending but instead has everything to do with earning power. Thus, any given income is better if no portion of it is non-taxable.
Dec 17, 2020, 5:53 pm
#15
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Yes, that much is crystal clear. What they do with that information is at question.
I theorize the question has nothing to do with discretionary spending but instead has everything to do with earning power. Thus, any given income is better if no portion of it is non-taxable.
I theorize the question has nothing to do with discretionary spending but instead has everything to do with earning power. Thus, any given income is better if no portion of it is non-taxable.