Doing your taxes

[And That]

The $8000 credit can't be claimed until you do your taxes next year - it's a credit based on '09 income. At least I'm fairly sure that's the case.

[JJHardy7]

There's really just one credit here... first time home buyers who purchased between 4/9/08-12/31/08 get a tax credit of (up to) $7500 and homes purchased between 1/1/09-12/1/09 get (up to) $8000. The repayment requirement is no longer valid on either version of the credit and both versions are refundable. This is, AFAIK, the final law.

 

Do you have a link or anything for the homes purchased from 4/9/08 through 12/31/08? I am curious to see if this is true regarding the payment. I haven't seen anything saying that it doesn't have to be paid back during that time, but I'm going to look now since I fall in that category.

[And That]

Since the credit in the stimulus package is more or less a modification of existing law, I believe the striking of mandatory repayment applies to the whole law. Most of the articles/blogs I've read would seem to agree with this. It also makes some logical sense (not that law always does) to have some degree of fairness - it wouldn't make sense to have one part of the law to require repayment and another part of the law to not require it.

 

From CNN Money... Note that the original home buyer tax credit law applied to purchases from 4/9/08-7/1/09. This is an extension and augmentation of current law.

 

The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit's expiration date to Dec. 1, 2009, from July 1.

 

But please don't take my word for it... I'm an accountant, but I don't do anything directly with taxes. And I use TurboTax to do my own. The actual language in the law will be made available shortly.

[JJHardy7]

But please don't take my word for it... I'm an accountant, but I don't do anything directly with taxes. And I use TurboTax to do my own. The actual language in the law will be made available shortly.

 

I've already filed my return with the credit (purchased in May of 2008) and I'm just hoping I don't have to pay it back -- selfish I know. If you find any more links, please post them. Everything I've still found either doesn't clearly mention paying the prior credit back or says that it still has to be paid back.

[fondybrewfan]

The $8000 credit can't be claimed until you do your taxes next year - it's a credit based on '09 income. At least I'm fairly sure that's the case.

Thanks,

 

So could I theoritcally claim the $7,500 existing credit this year and then claim another $500 next year? It nice to know that everyone is fairly confident that there will be no payback at all associated with the existing credit or the proposed alteration. Can I just go ahead and do my taxes then? Nothing that this stimulus passes should change by tax return this year correct?

[And That]

Here's a good blog to read for some information... he agrees with me on some points, not on others. He mentions that the IRS will rule on whether the non-repayment will apply to the $7500 credit for the '08 law. That is probably true, but as I said, to have any sort of fairness doctrine in the scope of the law, I have a tough time believing they'll make you repay it.

 

It's also still possible you'll be able to file for the $8000 credit this year, but I would tend to doubt it.

[Robideaux]

The current version of the stimulus bill waives the repayment of the tax credit for homes purchased in 2009, but makes no mention of retroactively waiving the provision for 2008 home purchases. Are you saying that you think this would be considered by the IRS in a decision separate from the stimulus bill?

[And That]

Yes... part of what the IRS does is interpret federal law and form it into code. It would be within it's scope authority to essentially repeal the repayment clause, assuming Congress won't fight them on it. They'll work with the Congress and the Treasury and make a decision on how exactly they'll apply all these new rules into the code.

[fondybrewfan]

Thanks for all the help on this And That

 

It looks like I have nothing to worry about since I bought the house in 2009. The question of buying in 2009 yet claiming on 2008 seems to have been answered in that repayment will not be required. I would have claimed the credit without knowing that I wouldn't have to pay it back so if it turns out that I don't then that is just gravy.

 

I agree that it wouldn't make any sense for the IRS to exclude 2008 borrowers from this alteration. They would be making it way more complicated than it has to do and it is extremely unfair to have two different sets of rules for the same credit.

 

I will probably file my taxes tonight and just get it over with. Yes I am doing my taxes on a Friday night.

[PeaveyFury]

It's also still possible you'll be able to file for the $8000 credit this year, but I would tend to doubt it.

 

After reading the actual text of the new stimulus bill this morning, I'm under the impression that you can claim it on your 08 return. None of the language of the new bill alters that language from the old bill, unlike the parts about repayment. But as with Toby, that's just my opinion.

 

EDIT: Here's the breakdown of the new credit, per the House summary:

http://www.house.gov/billtext/hr1_cr_jesb.pdf

 

Final credit is discussed on page 19. Based on this, I think the repayment requirement is only waived on homes bought in the 2009 window, and considering that they mention dating the purchase back to 12/31/08 (which was allowable for tax purposes on the original credit), I think it's claimable on the 08 returns.

[bigjase]

So I was planning on purchasing a house this year and would be eligible for this credit, but I guess I'm not sure I understand the credit. Do I want to claim more dependents at my employer so I would owe the government money at the end of the year and the credit would erase that? Or would the credit just come back to me at the end of the year in the form of a refund? Sorry if this is a dumb question, I'm not really great with this tax stuff.

[BMuch]

It's also still possible you'll be able to file for the $8000 credit this year, but I would tend to doubt it.

 

 

There appears to be a bit of a reversal of thinking and there's a good chance that if you bought the house in '09, you will still be able to claim the $8k on your '08 tax return. Sorry that I don't have a link. My tax software sent me an update stating that the taxpayer should be able to make the claim, but the IRS is still in the process of updating the tax form.

 

BMuch, CPA

[And That]

I read that, too, I forget where. It's very rare the IRS will let you do this - IRAs are one of the few examples. But it'll be good for the people that can do it.

[fondybrewfan]

The IRS jsut came out with the new regulations regarding the changes to the First Time Home Buyers Tax Credit

 

- For a home purchased between January 1 and December 1, 2009

- $8,000 or 10% of purchase price, whatever is lower

- Credit can be claimed on the 2008 or 2009 return (Form #5405 has been updated)

- For those bought in 2009, the credit does not need to be repaid

- For those who bought under the original credit in 2008, you are SOL, the old $7,500 credit still applies and you still have to pay it back

 

http://www.irs.gov/newsroom/article/0,,id=204672,00.html

 

http://www.irs.gov/pub/irs-pdf/f5405.pdf

 

If someone bought their house in 2008 and wanted to take this credit I would be super pissed because they still have to pay it back.

[fondybrewfan]

Just a little update from my previous post if anyone is interested.

 

As of right now you can't E-File if you plan on taking the new credit. You can paper file however. The IRS says that it will take about 2 weeks to update all software so if you want to E-file using Tax Act, Turbo Tax etc, just wait a couple weeks.

[PeaveyFury]

fondy, does that include amended returns for those now retroactively claiming the credit?

[fondybrewfan]

fondy, does that include amended returns for those now retroactively claiming the credit?

Yes, unless you want to file your amended return with paper. I have never filed paper income taxes but I would assume the wait time for the return is much longer, so it would probably just make sense to wait for E-File to be available. I'll try to remember to post an update when E-File is available

[whizkid]

Amended returns can only be filed via paper.

[fondybrewfan]

Since we spent a lot of time talking about the Homebuyers credit in this topic I thought I would pass along this info. You won't be able to E-File the new $8,000 First Tim Home Buyers Tax Credit until March 30th. If you are claiming the 2008 credit you can E-File. I got this excerpt from Taxact.com

 

UPDATE 3/11/09 The IRS has issued a statement that returns with Form 5405 claiming the First-Time Homebuyer Credit of $8,000 for homes bought in 2009, will be accepted electronically at the end of March. Please resubmit your return on Monday, March 30, 2009 after 6:00pm CST.

[Diskono]

http://www.irs.gov/newsro...cle/0,,id=204672,00.html

 

http://www.irs.gov/pub/irs-pdf/f5405.pdf

 

If someone bought their house in 2008 and wanted to take this credit I would be super pissed because they still have to pay it back.

 

That's me. But hey, at least now I can feel like less of a leech!

[RayKingsForemanGrill]

Who here is the tax expert? I have a question, but I don't want to plaster it all over the message board.

 

PM me, if you have a moment.

[wallus]

I just wanted to add that I bought a house. I will be honest and say that the $8000 made a big difference in me getting one now versus in a few years. The interest rates right now are ridiculously low!

[fondybrewfan]

I just wanted to add that I bought a house. I will be honest and say that the $8000 made a big difference in me getting one now versus in a few years. The interest rates right now are ridiculously low!

There is a bank here in town promoting a new mortgage product to take advantage of the tax credit. Since you can't claim the credit before you actually buy a house, this bank will lend you the money on the assumption that they will recieve the $8,000 once you file your taxes or amended return. So they are basically taking an assignment on your taxes. I am not sure on the specifics as far as how they can take an assignment on a federal tax return but that is another story all together. The credit was not designed to be used for a downpayment but this bank is trying to use it that way. I am not sure if the Federal government would be all that thrilled that it is being used that way either. But if it kicks the real estate market up I suppose its not all that bad.

 

I actually just got my $8,000 today plus the rest of my refund, I bought my house in February. For the first time in my adult life I will no longer have any credit card debt. Plus I have some money left over to due some home improvments. I am sure the government was hoping I would spend my entire $8,000 on purchases, services, etc but this is a once in a lifetime opporunity for me to wipe out all my credit card debt in one day and I am taking advantage of it.

[RyDogg66]

How much should I have expected to pay for my accountant to review and amend my 2005 return. All he did was add the child tax credit and/or earned income credit. He charged me over $200. That seems a bit much, but what do I know, right?

[wallus]

There is a bank here in town promoting a new mortgage product to take advantage of the tax credit. Since you can't claim the credit before you actually buy a house, this bank will lend you the money on the assumption that they will recieve the $8,000 once you file your taxes or amended return. So they are basically taking an assignment on your taxes. I am not sure on the specifics as far as how they can take an assignment on a federal tax return but that is another story all together. The credit was not designed to be used for a downpayment but this bank is trying to use it that way. I am not sure if the Federal government would be all that thrilled that it is being used that way either. But if it kicks the real estate market up I suppose its not all that bad.

 

I actually just got my $8,000 today plus the rest of my refund, I bought my house in February. For the first time in my adult life I will no longer have any credit card debt. Plus I have some money left over to due some home improvments. I am sure the government was hoping I would spend my entire $8,000 on purchases, services, etc but this is a once in a lifetime opporunity for me to wipe out all my credit card debt in one day and I am taking advantage of it.

Wow congratulations! I think the government would not mind you doing that because now you can spend your money on products rather than on interest. I plan on spending my $8000 to either wipe out my car payments or put down on the house itself.