Hilde's Mortgage Blog

Little-Known Facts About the 2009 Home Buyer Tax Credit

You cannot file a 1040 EZ to claim the tax credit. Nor can you file tax returns electronically if claiming the tax credit.

Why no electronic filing or 1040 EZ forms? It's the first step in stopping fraudulent tax credit refunds. Believe it or not, the IRS never had a way to determine if a person owned a home-no auditing software in place-to determine if they previously claimed a "mortgage interest" deduction within a three-year time period. The IRS is building auditing software now to "catch" previous homeowners who are trying to claim a FTHB tax credit.

Secondly, the IRS now requires that the HUD-1 or closing statement be attached to the 5405 form (and that cannot be attached electronically). Here's the link to the 5405 Revised Form dated December 2009: http://www.irs.gov/pub/irs-pdf/f5405.pdf

And to give them time to audit the document, the IRS is telling tax advisors to expect an average of a 16-week turn around time-which means that it could either be the refund or a request for additional documentation. Mr. Geissler says that one of his clients recently received an IRS notice, requesting a letter from a landlord, a copy of a driver's license and the closing statement on an amended tax return where the client was claiming the FTHB tax credit. Yes, the new law allows them to ask for additional info on amended returns.

So, if you are expecting an income tax refund and a homebuyer tax credit refund, both refunds could be held up for several months.

Here are the links to the most recent updates regarding the Nov. 6, 2009 homebuyer tax credit extension: 10 Important Facts About the Extended First-Time Buyer Tax Credit

http://www.irs.gov/newsroom/article/0,,id=215827,00.html?portlet=7

First-Time Homebuyer Tax Credit

http://www.irs.gov/newsroom/article/0,,id=204671,00.html