Taxes Returns, Self Employment, and Getting a mortgage


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Ok. I will try to keep this simple. not sure if I can though.

We all know self employed make more money then they report on their Tax returns. As self employed look and generaly take all deductions they can. This is great for not paying so much in taxes. but hurst when you are trying to get a mortgage to buy a home.
I have read that if you are planning to buy a home in the coming year you should bite the bullet and file a tax return that show you with a high income even though you will pay more in taxes you can get a higher Mortgage. One place I read even suggest that once you Mortgage closes you can go back and file an amended tax return and claim what you left out.

We have over the past 3-4 years been paying off alot of bussiness debt. (I file as a Sole Prop) so I show alot of deductions for interest and such which drives my income down. Alot of our debt has since been paid. The rest of debt will be cleared with money left over when our Primary residence sells. so these expences that are showing in my 2010 return do not accuratly reflect our income. as alot of this money that was spent paying debt and this debt is no longer there to be paid. These funds are now freed up.

Are we going to have to wait until next year to file another tax return that will show less of these deductions before we can get approved for the mortgage that we know we can afford?

Can I ammend my 2010 return and remove some of these deductions to show a higher income? if so how would this affect the EIC credit we got?

Any other suggestions?
 
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