Re: new here and don’t want to give too much info - Posted by GL(ON)
Posted by GL(ON) on December 23, 2006 at 14:45:41:
I went 10 years without filing or paying taxes. If you don’t owe any taxes it’s not a crime to not file.
Your best bet is to get some kind of low paying job and file for the year. Can you justify something for 2006, on the books or off the books? Self employed is OK. File and pay taxes. You have to use some common sense here. Going from 0 to $1,000,000 a year is going to throw up some red flags. But if you show a low income even one that you don’t have to pay taxes on, that’s fine. As long as you file you will probably never hear anything more about it.
If anyone asks, have some answers ready. “Why didn’t you file income taxes for 25 years?” “I was sick, broke, drinking a lot, drifting from one low paid job to another. Now I have got my life together, and I am trying to make something of myself”. If you really wanted to be prepared for anything you could join the AA and show your 6 month pin to back up your story.
If it appears that you had little or no income in the past, they aren’t going to knock themselves out investigating something with no payoff. At the most you might get a letter or talk to an IRS agent on the phone for a few minutes. I didn’t even need to do that.
When you say “my profession” I assume this is something legal. Even if it isn’t the IRS will take your tax money.
Once you are on the books with the IRS you can start building up your credit history. Get a credit card at Sears, buy something you need anyway, and pay the bill off early. This gives you the best credit rating there is. All the computer knows is Paid Early or Paid Late. Pay one bill early and you go to the top. This is one of the few places where you start at the top. I suggest Sears because they have the most liberal policy on handing out credit cards.
A month later go get another credit card. Walmart or some other store. They will check your credit and find you are R1 with Sears. When you get the new card, buy something you need anyway and pay the bill early.
Once you have 2 or 3 credit cards, get a Visa or Mastercard. You should be getting lots of applications in the mail by now. If they won’t give you one, go to a local bank and get a secured Mastercard or Visa. You do this by getting a card with a $500 limit and giving them $500 cash to hold.
Once you have the card do you know what to do? Buy something you need anyway and pay it off early.
Amazingly once you have one Mastercard or Visa (even a secured one) it is no problem getting more from other banks, unsecured.
Don’t abuse this. You want to have no more than 4 credit cards in use at one time. DO NOT run up bills. Pay them all off at the end of the month.
If you have more than 4 cards it drags down your credit rating. UNLESS they have zero balances. This is why it is so important to pay them off each month.
By doing what I just said you will build up a beautiful credit rating. In a year or so the banks will be falling over each other to loan you money at cheap interest rates.
You need to have 2 years taxes to show the lenders. You want to show a modest income for 2006 ( no red flags to the IRS) and a substantially larger income for 2007. This will establish your growing ability, income, and credit worthiness.
Play your cards right and one year from now you should have a better credit rating than Donald Trump. After all he got in trouble and stiffed the banks in 1992, while your record is perfect.
As far as buying a house or a duplex that is quite possible with or without a credit rating. Lease option, contract for deed, land trust, partnership deals, all would allow you to own or at least control substantial ammounts of property.
The best thing you could do is go legit and get yourself on the record right away. Start building up your credit rating. Credit is the life blood of real estate investing.
Remember it takes money to make money but it doesn’t have to be your money. So guard your credit rating with your life.
You also need to educate yourself about investing. Read the success stories and other parts of this web site, they are excellent education in themselves. Look in your local library for books and tape courses. This can all be done for free.
This will answer most of your questions.
Figure out what you want to do and if you have any other questions come back and ask them. Someone is sure to have the answer or know where to find it.