In what situation would a buyer typically need to provide their tax returns?

A buyer typically needs to provide their tax returns during the mortgage application process to demonstrate their income and financial stability. Lenders require this information to assess the borrower's ability to repay the loan, understand their financial history, and verify the income that will be used to qualify them for the mortgage. Tax returns offer a comprehensive view of the borrower's annual earnings, as they include all income sources, deductions, and other financial details relevant to the lending decision.

In contrast, providing tax returns is generally not a requirement when applying for a new credit card, selling a home, or for insurance evaluations. Credit card applications usually rely on current income and credit scores rather than past tax returns. When selling a home, the focus is on property valuation and sale conditions, not the seller's personal tax documents. For insurance evaluations, while financial stability may be assessed, it typically does not require detailed income documentation like tax returns. Thus, in the context of mortgage lending, tax returns are essential for evaluating a buyer's financial profile.