UNDERWRITING TRAINING GUIDE - INCOME

B. Form 2106 – Employee Business Expenses

Borrowers who are not self-employed and have expenses related to work (i.e., travel,
transportation, car, meal, entertainment, or gift expenses) are allowed to deduct certain costs as an
itemized expense.

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Quatrro Mortgage Solutions Pvt. Ltd. | 119 Udyog Vihar Phase I, Gurgaon
UNDERWRITING TRAINING GUIDE - INCOME

Form 2106 reports reimbursed and unreimbursed business expenses.

1 Step 1 Form 2106 lists the borrower’s total expenses.

2 Step 2 Shows the offsetting amounts paid by the borrower’s employer (not reported as salary or
wages).

3 Step 3 Subtracts the amount paid by the employer and arrives at the net amount a borrower is
allowed to claim as an itemized deduction.

Only 50% of the unreimbursed meals and entertainment cost may be deducted during the year, but
in reality all of the money was spent. To account for this loss in deduction, you must subtract all of
the actual expenditures from cash flow. Add Columns 8A and 8B together and subtract the total
from income.

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Quatrro Mortgage Solutions Pvt. Ltd. | 119 Udyog Vihar Phase I, Gurgaon