When it comes to renting a property, landlords have the right to screen potential tenants to ensure they will be able to pay rent on time and take care of the property. This includes requesting information such as credit scores, employment verification, and rental history. But can a landlord also ask for tax returns?
The answer is yes, a landlord can ask for tax returns as part of their screening process. However, there are certain limitations to this request and it must be done in compliance with applicable privacy laws and housing laws.
The information contained in this post is for informational purposes only. It is not legal advice. You should seek the advice of a qualified legal professional before making any decisions relating to the topics covered by this article.
We may earn commissions from products and services that are purchased or recommended through our website as part of our affiliate partnerships. As an Amazon affiliate, we may earn from qualifying purchases.
Why would a landlord want to see a tenant’s tax returns?
A landlord may request a tenant’s tax returns for a few reasons.
First, tax returns can provide insight into a tenant’s income and employment history. A landlord may want to verify that a tenant has a stable source of income and is able to afford rent. In most cases, a landlord can use paystubs to verify this, but if the potential tenant is self-employed, they won’t have paystubs.
A common compromise is asking for the last year’s tax returns instead.
Second, tax returns can reveal certain debt if the tenant is deducting interest on that debt.
Finally, a landlord may want to verify a tenant’s identity and ensure they are not using a fake identity or stolen social security number. Tax returns include a tenant’s social security number so that can serve as a good form of id verification.
What are the limitations of requesting tax returns?
While a landlord can legally request tax returns from a tenant, there are limitations to what they can do with the information.
For example, if a landlord uses the information in the tax return for an unlawful purpose, such as discriminating against them on a prohibited basis, that would obviously be a problem.
In addition, landlords must also protect a tenant’s privacy and confidential information. Tax returns contain sensitive information such as social security numbers and other personal information. Under law, a landlord must keep this information secure and cannot share it with others.
It’s important for landlords to understand the legal and ethical considerations when requesting tax returns. If you are a landlord (or even a tenant) and you are unsure about whether the request is permitted, it’s best to consult with a lawyer or property management professional.
If you prefer to have a lawyer assist you, I would try JustAnswer. They boast access to thousands of highly-rated, verified real estate lawyers whom you can connect with via their unlimited chat service.
By clicking the banner below, you can get a one week trial membership for only $5, which you can cancel at any time.
How should a landlord request tax returns?
If a landlord decides to request tax returns from a potential tenant, they should do so in a professional and respectful manner. It’s important to explain why the tax returns are needed and how they will be used in the screening process.
The landlord should also provide clear instructions on how the tenant should submit their tax returns. For example, they may request that the tax returns be submitted through a secure online portal or mailed to a specific address.
Word of warning to landlords: There is software out there that can fake tax returns, so a prudent landlord may want to ask the tenant to provide a Form 4506 (which is a request for copy of tax return) that is submitted to the IRS. The IRS can then send the tax return directly to the landlord.
Landlords should also be prepared to answer any questions the tenant may have about why tax returns are being requested and how the information will be used.
What should tenants do if asked for tax returns?
If a landlord requests tax returns from a tenant, it’s important to understand why they are being requested and how the information will be used. Tenants should ask the landlord for clarification if they have any questions or concerns.
Tenants should also be prepared to provide alternative forms of income verification if they are uncomfortable sharing their tax returns. For example, they may provide recent pay stubs or bank statements that show their income.
Debt levels can easily be verified through credit reports, which are one of the most common verification measures out there for landlords.
If a tenant decides to provide their tax returns, they should ensure that they are submitting the information securely. They should also keep a copy of their tax returns for their own records.
Closing Thoughts
In conclusion, a landlord can legally request tax returns from a potential tenant as part of their screening process.
However, they must do so in compliance with fair housing laws and protect a tenant’s privacy and confidential information. If a tenant is uncomfortable sharing their tax returns, they should provide alternative forms of income verification.