My wife and I bought our very first house (closed in June 2009). In order to get the $8,000 tax credit back, I assume we will have to fill out a special form when we do our 2009 taxes? IWhich form is it? Also, is there anything else to do besides that?
Thanks.
File form 5405 along with your tax return. You could instead amend your 2008 tax return by filing form 1040X and form 5405.
Based on word coming in from many tax professionals, it is a very good idea to also attach a copy of the closing statement, form HUD-1, you received at closing. I've even heard from some areas where filers of amended returns requesting this $8000 credit were also being asked to attach a copy of the filed deed!
See
Arthur Kamlet wrote: I've even heard from some areas
We will likely see closer scrutiny in the near future:
From BusinessWeek article:
"J. Russell George, a Treasury Dept. inspector general, told the House Ways and Means Committee that 19,300 filers had claimed a deduction on a home they hadn?t even purchased, claims worth $139 million. Some 74,000 filers claimed a credit but aren?t entitled to one because they owned a home within the past three years."
This site has many individuals' personal reports on how long it is taking to get the credit, holdups, how the credit is being sent, and interest earned while the IRS processes the tax credit paperwork:
Curiously the interest rate being paid seems very high, in excess of
4% APR.
I can see why IRS would want both the closing statement AND a record of deed transfer because a completely bogus closing statement may easily be typed up on the HUD form for submission with the tax return. At first IRS was concerned that people with same last names as buyer and seller might be selling to related parties, and that's still a valid point.
So if IRS can verify that there is a valid closing statement and that transfer did in fact take place, they're almost certain everything's on the up and up. EXCEPT for one remaining problem, and that is whether or not the buyer qualifies as not having owned a principal residence in last three years.
ChEAr$, Harlan Lunsford, EA n LA
Easily? I doubt the IRS will expend the time to do what should be the taxpayer's task. Even if the Service had the resources to locate, identify, review, and print online property records for each claim, they would rarely see a publicly recorded HUD-1. If the closing statement is needed, it seems attaching it would expedite the process.
The interest rate on overpayments is set in IRC 6621 as the federal short term rate plus 3%. Right now the rate is 4%, but before it was even higher. It's a bug in the tax code that you can file an amended
1040-X to claim the housing credit, because you get a few extra hundred dollars in interest, and plus you may qualify for the credit for 2008 but not 2009 (maybe your income is too high in 2009) even though you purchased the house in 2009.
The IRS should do it because they can verify and there will be less fraud as a result. Verification will be done by computer. It might take a team of software engineers 3 months to develop and test such a program. As this is the government, make that 9 months. At a cost of
100k per software engineer, and 6 engineers, that would be 600k. Funny, they could offshore some work to India and save 100k or so. They could add a $1 fee to everyone who gets the credit, and this program would pay for itself -- I don't want to see the country sink further into debt.
If it is the taxpayer's task, then ISTM the tax form instructions would say so. Instead requirement of further documentation occurs on a case-by-case basis. ISTM also that the public records accessible online via, for example, county clerk offices, are surer proof then a photocopy of property transfer records. If I were the IRS, I would trust the public record online before I trusted an easily altered document that could then be photocopied.
To me it is a little vexing, given the general rule about not attaching more paperwork than is directed. Yet there are many reports of people having to produce more paperwork.
The only thing I feel good about in this process is that the tax credits are happening; people are eventually getting their first-time homebuyer tax credit checks and with generous interest.
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