Tim Hagedorn

To claim the credit on your 2008 taxes, you must file and amendment to your 2008 return. To do this you will need two forms: Form 1040X for filing an amended return;and form 5405 for the home buyer tax credit.

I had just went to local tax accountant and only charge me $30.00 and took only minutes to fill out.

Applying the Home Buyer Tax Credit to Your 2008 Return

To claim the credit on your 2008 taxes, you must file an amendment to your 2008 return. To do this you will need two forms: Form 1040X (PDF 365K ) for filing an amended return; and Form 5405 (PDF 257K) for the home buyer tax credit.

You can visit the IRS site using the links, print out, and fill in the forms manually or type into the forms and save them on your computer. Be aware, though, that the 1040X tax form can only be filed in hard copy, and cannot be submitted electronically.

1. First, fill out Form 5405 using the instructions in Determining the Amount of Your Home Buyer Tax Credit.
   
   
2. Then fill out Form 1040X.
   
   On the 1040X you'll find a section called "Payments." Look for Line 15, "Credits." On this line you have three columns. On the first you list the credits you took in your original filing (for most people, this will likely be zero); on the second you list any new credits; and on the third you list the "correct" amount (that is, what the new amount should be).
   
   
3. If in your original filing you took no credits, you enter a zero in the first column.
   
   
4. In the second column you enter the amount of your credit, which for many people will be the full $8,000.
   
   
5. And in the third column you list the correct amount, which in most cases simply means restating the $8,000.
   
   
6. Add your housing tax credit amount to any other amendments you're making then total all the amendments up.
   
   
7. On the back of the form, write an explanation of why you're filing the amendment. Here you should explain in 2-3 sentences why you want to take the credit. You should include the day that you closed on the house and mention that you're electing to amend your 2008 return rather than wait until 2009.
   
   
8. Finally, attach Form 5405 to Form 1040X and file your amended return.
   

Collecting Your Refund

Any adjustment to your 2008 taxes along with any refund for which you qualify will be sent to you. Since the tax credit is fully refundable even if your tax liability is less than the tax credit amount, you get the full value of the credit. That means the IRS will cut you a check for the balance.

Is There an Income restriction ?

Yes. The Income restriction is based on the tax filing status the purchaser claims when filing his/her income tax return. Individuals filing Form 1040 as Single ( or Head of Household ) are eligible for the credit if thier income is no more than $75,000. Married couples who file a joint return may have income of no more than $150,000.

Do I have to repay the 2009 tax credit ?

There is no repayment for 2009 tax credit.

How do I apply for the credit ?

There is no pre-purchase authorization, application or similar approval process. All eligible purchasers simply claim the credit on their IRS Form 1040 tax return. The credit will be reflected on a new form 5405 that will be attached to the 1040.

1. What's this new homebuyer tax Incentive for 2009

The 2008 $7500, repayable credit is increased to $8000 and the re payment feature is eliminated for 2009 purchasers. Any home that is purchased for $80,000 or more qualifies for the full $8000 amount.

It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.

2. Who is eligible ?

Only first - time homebuyers are eligible. A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase.

3. How does a tax credit work ?

Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual's income return. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. If your tax liability was $5000 you would get a refund of $3000.

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