First-time Home Buyer Credit and Tax Refunds Update
The IRS recently released information on processing issues that are impacting a small percentage of tax returns involving repayment of the First Time Homebuyer Credit (FTHB), primarily involving 2008 home purchases. While most of these returns are processing normally, the IRS recognizes the hardship caused by delayed refunds, and has assigned additional staff and resources to address the issues promptly.
It is important to note that taxpayer returns claiming a home purchase in 2010 are not affected, and those returns are being processed as are the vast majority of other homebuyer returns.
The groups primarily impacted by the processing issues include:
- Married Filing Joint taxpayers who received the FTHB credit on a 2008 purchase
- Taxpayers who received the FTHB credit and are now reporting the sale or disposition of their home
- Taxpayers who received the FTHB credit and are attempting to pay back more than the amount required (typically $500)
Taxpayers who have already filed do not need to take action, but can check the status of their refund at www.IRS.gov.
Those who have not yet filed and are making a repayment of the credit this year, should follow these guidelines:
- Couples filing a joint return for tax year 2010 who received the credit on their jointly filed 2008 tax return should file two 5405 forms, one for each taxpayer.
- Couples filing a joint return for 2010, but who had a different filing status in 2008 and only one spouse received the credit, should file one Form 5405 for the taxpayer who received the credit.
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