Idea for Tax preparers doing New House Credit

Go for it.

That's one common approach, but of course it should always be the client's informed choice. Doesn't work for anyone with a balance due, of course.

It's more work for you, do you charge extra for the amendment?

-Mark Bole

That's been the method at our major national tax prep firm this year, to the point that our software will let us create and bill for the 5405 with the original return without printing it to the filed copy, and then we can just create the amendment quickly with out a second charge.

Caveats and notes:

1. One has to sign the original return stating that, to the best of his/ her knowledge, the return is true and complete. So I wonder how the IRS feels about immediately turning around and filing an amended return. Maybe it is no big deal, especially during this major recession when folks may really need any refund (separate from the house credit) due. Just saying.

1. Per the latest at
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   it is taking a very long time to process these credits, and the waittime seems to be going up. At this point, I would advise people whobought in 2009 to be prepared to wait a year.

1. My friend who bought in October 2009 calls the IRS toll free house credit number about once a month. The IRS reps keep assuring her to expect the check sometime in February. We shall see.

1. For people buying in 2010 and eligible for the credit, I would immediately change withholding so that, when filing one's 2010 taxes, taxes expected to be owed roughly equals or exceeds by a little bit the house credit.

And yet . . . a year ago I asked in article :

And last year the answer was, in article :

======= Just sayin', Lee

========================================= MODERATOR'S COMMENT: The FTHBC is an elective credit. Elective credits do not have to be taken. A tax return without the credit is true and correct, even though one with the credit would also be true and correct. No conflict here.

I do NOT have it at my fingertips (and there is no time this time of year for me to go looking for it) but I recall a thread when the FTHBC first came into being about folks who did NOT want to take the credit because it was really a loan that they had to repay. I went to several seminars (I typically get over 100 hours of CPE annually) and I remember that the credit was NOT optional, but mandatory.

Our moderator has been around some time, perhaps even longer than the code itself , if he says the credit is optional my tendency is to believe him - I do KNOW that he is an experienced and learned professional. However, I don't believe that I've ever heard of an OPTIONAL credit.

Dick - could you provide us with a cite for this? Or at least some reference to the concept of an optional credit? If I'm lacking, I appreciate the education.

Thanks, Gene E. Utterback, EA, RFC, ABA

Taxpayers have never been required to apply for a tax credit. There is nothing in the Housing and Economic Recovery Act of 2008 that requires a taxpayer to take the credit. There is a clause in the Act (this is what you may been thinking about) that makes it mandatory for a taxpayer to file a tax return not withstanding Sec. 6012, if some subsection of Sec. 36 causes tax to go up. This is referring to the recapture rule in 36(f) if you dispose of the home prematurely.

Alas, in this case it was an assistant moderator who opined that note. No cites.

Do dependents have to be taken?

Here's a hypothetical situation: Taxpayer A's e-filed return is rejected because Taxpayer B has already filed a return claiming a dependent also claimed by Taxpayer A. Taxpayer A, however, is the one who actually has the right to claim this dependent.

Would Taxpayer A be justified in e-filing without the disputed dependent, in order to claim overwithheld tax, and subsequently file

Lee

Why not? Actually there's a farily widepsread tax strategy dealing with the Education Credits.

Consider a MFJ couple whose income places them well into AMT range and they have paid tutition and fees for their dependent child.

In AMT land, they are likely not to benefit from the education credit nor from the dependency exemption. So it costs them little or nothing to not claim their kid.

If so, the kid still cannot claim a personal exemption since the parents could claim, but if the parents do not claim a dependency deduction, the kid can claim the education credit.