Homeowners filing for the home buyer tax credit are not allowed to use electronic filing and must file hard copies due to special documentation requirements.
Earlier this year, the Internal Revenue Service (IRS) deployed new home buyer tax credit forms and instructions requiring forms that will force taxpayers to file on paper, rather than electronically.
The new home buyer tax credit filing rules are to ward off a repeat of 90,000 taxpayers who fraudulently claimed the credit, according to the U.S. Treasury.
Under the new and expanded home buyer tax credit rule , the credit is worth up to $8,000 for first-time home buyers and up to $6,500 for qualifying existing home buyers, in both cases, who buy a primary residence or have one built.
The tax credit is refundable. A credit that is larger than the taxes owed is returned to the taxpayer in the form of a refund.
The home can cost no more than $800,000 and qualifying income is limited to a maximum of $125,000 for single taxpayers and $225,000 for joint taxpayers.
Get the full scoop online from the IRS’ “First-Time Homebuyer Credit” page online.
All taxpayers (first time and move up buyers) seeking a credit or refund, must use the new IRS Form 5405 “First-Time Homebuyer Credit and Repayment of the Credit” (Taxpayers must pay back the credit if they sell the home within three years). The instructions, which teach taxpayers what documents are required, are available on IRS FORM i5405.
In addition to Form 5405, also include at least one of the following documents:
- A copy of the HUD-1, Settlement Statement, showing all parties’ names and signatures, property address, sales price, and date of purchase.
- For mobile home buyers who don’t get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
- For new home buyers who don’t get a settlement statement, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
Existing home owners applying for the $6,500 maximum tax credit must additionally prove they lived in their old home for the required period.
To do so, options are:
- File IRS Form 1098, “Mortgage Interest Statement.” IRS Form i1098 offers the instructions.
- Also, supply mortgage interest statements or property tax records or homeowner’s insurance records.
Again, because some of the documents required are not standard tax forms, taxpayers seeking the credit cannot file electronically.
They can, however, use off-the-shelf tax software or the IRS Free File online software to prepare returns, but they must still print out the return and mail it in with the required documents.
In addition to accuracy and compliance, the only other way to speed up any refund is to request, with the return, that the home buyer tax credit refund be deposited directly into a bank account.
– Copyright © 2010 Realty Times. All Rights Reserved.