Do you know that a shock is in store for those recent home buyers who are hoping to bring home a hefty tax return in the next few weeks? Many of them are happily heading to their tax preparers office as soon as they get all their W2’s only to discover that it will be several weeks before they will get their refunds.
Yep, that’s because the IRS has had it with the tax fraud that several people committed for the sake of getting a tax credit that they were not due. So now everyone claiming the first time home buyer credit or the expanded credit for previous home-owners will have to paper file their return.
Those who are not due a refund, or due very little, will not find this to be of much of an annoyance. However for those who are expecting a refund of perhaps $10,000 or more, due to the home buyer credit, withholdings and other credits, are probably counting on having it in the bank by mid-February. Hopefully no cruises are booked with the intent of paying for it from that fund, because even if a tax return was filed today, it could be the end of March before the refund arrives.
There are a couple of ways around this that could allow the regular credits to be obtained earlier than the home buyer credit.
While it’s not recommended to file a regular return now and then an amended one later if the home buyer information is already in hand…it is permissible to amend the 2008 return with the home buyer credit and e-file the 2009 return for a quick refund now. The home owner would still have wait up to 12 weeks for the amended return’s refund, but at least they could get their other refunds quickly.
Current buyers may want to go ahead and file their regular return, and then once their home purchase is complete they can file an amended 2009 return to obtain their tax credit.
In order to file, homeowners must submit a paper tax return along with form 5404 and a properly executed settlement statement.
Professional tax preparers and accountants should be up to speed with these new rules and procedures, so home owners should consult with them about the option that would be best for them.
This article is not intended to be a substitute for professional tax advice.
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