Taxpayer asks:
Im going to settlement on a property on May 1st, 2009.
I havent filed my taxes yet because I wasnt sure if I should…
Should I file for an extension until after settlement to make sure I get the $7500-$8000 all together… or should I file now??
I dont know if they have another form to fill out AFTER settlement??… Your help would be GREATLY appreciated!!! THANK YOU!!
Taxgirl says:
I’m assuming from the settlement date that you’re hoping to claim the newly passed housing credit… the one that you don’t have to repay?
That tax credit is part of the American Recovery and Reinvestment Act of 2009 and is for first-time homebuyers only (defined as someone who has not owned a principal residence during the last three years). Unlike the 2008 credit, this tax credit does not have to be repaid. Income and phaseout restrictions apply with single taxpayers capping out at $75,000 and married couples at $150,000 qualify for the full tax credit.
The credit is equal to 10% of the home’s purchase price up to a maximum of $8,000. Settlement must be made between January 1, 2009, and December 1, 2009.
All of that said, the credit under these circumstances will be reported on your 2009 return filed in 2010. It cannot be claimed on your 2008 return filed this year. So, you won’t need an extension or other information this year. Come tax time next year, you’ll need your settlement info and a federal form 5405 to determine your applicable tax credit amount. But that’s it.
Enjoy your new home!
Doh! I no sooner had hit “send to weblog” than I saw an IRS memo from March on my desk…
The IRS memo says that taxpayers who qualify can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year. You can file an extension now or amend a 2008 return.
Under your facts, you can’t file now unless you’re planning to amend the return later. The rules are very clear that you cannot file in anticipation of settlement; it must have already happened when you claim the credit.
As between your two choices to file and amend or file an extension, I’d choose to extend. Amending returns is not terribly difficult but in my experience, there are more mistakes made with amended returns than extended ones.
And as above, you can also choose to claim the credit in 2009 rather than 2008. I know that might sound like it doesn’t make sense (why wait?) but if your income is close to the threshold or subject to the phaseout and would be different for 2009, you may be entitled to more credit by taking it in 2009.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
We qualify for the housing credit (new homeowners, closed Jan 28th, 2009). We also already filed our 2008 taxes and the efile was confirmed as received. We owed a wee bit (from Schedule C related taxes). We are securely under the limits for income. Would it be more beneficial to amend our 2008 taxes or wait and just claim the credit in 2009? Does an amended return attract more audit attention? We could sure use that credit now but I don’t want to increase our chances of getting audited. We file jointly, 1040, with two Sch C (one with a loss this year, one with a profit).
I don’t believe that an amended return attracts more attention on the audit circuit, I just find that there are more problems with amended returns than extended ones. It’s not hard to amend but folks often use the wrong forms, don’t fill out the right info, etc. It also takes a LOT longer to process than a “normal” return, so don’t be alarmed at the pace: IRS says to plan on 8-12 weeks.
Your audit risk is probably already medium-ish because you reported a Schedule C with a loss. That tends to get higher scrutiny than a plain vanilla return, though keep in mind that the % of audits is still very low – so don’t lose any sleep over it.
If you could use the refundable credit now, then there’s no harm in filing an amended return. I suspect the IRS will get a lot of these since it has not been well publicized that you can take the 09 credit on your 08 taxes (exactly how I made my mistake, above). To amend your return for purposes of the credit, file a federal form 1040X with a completed federal form 5405, First-Time Homebuyer Credit, attached to the return. In your case, the box on federal form 5405, Part I, line C, must be checked.
My tax guy placed the wrong address on my 5405 Form for my first time homebuyer credit on my amended return. It has gone through 3 reviews and the irs has forwarded it to the Taxpayer Advocate Service. Now I cannot even get a call back from the advocate service. I keep leaving messages for days and cannot get a call back. I am hurting very bad as even my checking account is overdrafted $400 at this moment. What should I do? I cannot get an answer for the life of me? It was received by the IRS on April 13th 2009.
I need help on what to do…On January 28th I filed my taxes and had a free and clear to close on my house that following Monday so I went ahead and included the house at that time well then the house was sold out from under us for cash we found out on our closing date. Anyways I had originally filed for that house while we were still under the 7500 tax credit 09. I need to know what to do to ammend that return change it to the 8000 and to our new address we closed and moved in on June 15th. Any ideas I know I am not the only person that did this I found one other persons post that was similar on another site but nobody answered them.
I bought a home on April 13Th 2010 and sent my amendment in to the IRS on the 29Th . I know I should be getting the credit but I was wondering how long it can take for an amendment to go through. How long should pass ? I know I am not the only one wondering so can you give a a high light on how long it will take the IRS to send out payments? Is there a way to track your amendment? (without calling of course).
Thanks so much ,
Melissa