2011 Updates on the First Time Homebuyer IRS Tax Credit
If you participated in the First Time Home Buyer (FTHB) tax credit program, which allowed an $8,000 credit for first time home buyers who purchased their residences between January 1, 2009 and April 30, 2010, there are a couple of potential tax headaches on your horizon as the IRS struggles to process your paperwork. You should be aware of these as they may make an impact on your tax return this year. The changes, says the IRS, are due to processing issues and are delaying some taxpayers’ refunds.
Married Filing Jointly Taxpayers
If you filed as married filing jointly and received the First Time Homebuyer credit on a 2008 purchase and filed your tax return before February 22, then you may be hit with a processing issue. The IRS identified a problem with these taxpayers’ returns that is related to Form 5405.
The IRS maintains that they are ‘aggressively’ working towards fixing the problem. They also expect the issue to be resolved in time for taxpayers to get their refunds by April 5. If you have already filed, there is nothing to do but wait. If you haven’t filed, both spouses should file a separate Form 5405 in order to nip the problem in the bud. If only one spouse can receive the credit, that spouse alone should file the 5405.
Taxpayers Who Received the FTHB
Taxpayers who received the FTHB and are now reporting the sale of their home OR are attempting to pay back more than the amount required might also get hit with issues. Both these issues deal with the IRS’ core tax processing systems, the agency reports.
Unfortunately, the IRS has so far provided no specific date as to when these issues will be fixed. They are working on updating their systems and hope to have it resolved sometime in April. Until then, continue to try and check in and report what you need to.