First Time Homebuyers Credit Pre Nov 6

[Chowdahead]

I have a client who purchased his first home before Nov. 6. He is finally getting around to filing for the first-time homebuyer credit, which as far as I know he is still allowed to do on 2008 because he can use the old form.

The intriguing part is that he made under the maximum allowable income guidelines in 2008, before the phaseout is required. In 2009, he made over the income guidelines.

So the way I see it, he should amend his 2008 return when his income was less. Because if he files for the credit on his 2009 return, he will be subject to the phaseout and he can't even file it until the new form 5405 is available.

Is my line of reasoning correct here?

[TAXBILLY]

Amending 2008 is a good idea.

You however have to use the new form. ATX doesn't have it posted yet but the form and the instructions are at irs.gov.

taxbilly

[Kea]

Why can't he use the old form if he purchased before November 6?

I have a client that purchased November 15, so we are still waiting for the new form. Does anyone know if ATX will add it to 2008 & 2009 programs? I would prefer to amend 2008 & do it all in one program.

[TAXBILLY]

Page 1:

http://www.irs.gov/pub/irs-pdf/i5405.pdf

taxbilly

[kcjenkins]

Why can't he use the old form if he purchased before November 6?

You not only CAN use the old form, you actually MUST. Read the instructions for the new form, page 1, Purpose of Form, second paragraph, where it says "This revision of Form 5405 can be used to claim the credit only in the following situations."

[Chowdahead]

Amending 2008 is a good idea.

You however have to use the new form. ATX doesn't have it posted yet but the form and the instructions are at irs.gov.

taxbilly

I would be using the old form since I would be amending the return using ATX 2008. He is allowed to use the old form on the 2008 amendment I believe.

[Chowdahead]

By the way this entire form debacle is ridiculous. The IRS doesn't have the new form ready so any return claiming it in TY2009 is delayed. I have clients just saying they will amend 09 later rather than wait. Fine by me since I get to charge twice. :rolleyes:

[TAXBILLY]

>>I would be using the old form since I would be amending the return using ATX 2008. He is allowed to use the old form on the 2008 amendment I believe.<<

Read the directions for the new form.

taxbilly

[mcb39]

I used the "old" form to amend the 2008 return for a gal who purchased in August of 2009. As soon as you put the date of purchase in, it changed the credit from $7,500 to $8,000. We thought that amending 2008 would be the best route as she was single when she purchased the house; she was single when she filed 2008 return; but she got married in Sept, 2009 so will be filing MFJ with a new name for 2009. Heaven forbid that we confuse the IRS any more than they already are.

[rick in cal]

I have a married couple who just called me saying the IRS refused their 1040x because it was filed on the outdated form. They told them they would no longer accept the 1040x or the 5405 with the OBM No. 1545-0074. When my client asked for a copy of the new form they were told it isn't ready yet. I'm waiting for them to mail me the IRS letter but I went to the IRS website and couldn't find the forms with the most current OBM no which ends in 0091. As far as I can tell their forms were filed correctly and the IRS is stalling their refund with no basis for doing so.

[David1980]

By the way this entire form debacle is ridiculous. The IRS doesn't have the new form ready so any return claiming it in TY2009 is delayed. I have clients just saying they will amend 09 later rather than wait. Fine by me since I get to charge twice.

I can't help but wonder if the form not being ready (Well, it is now on the IRS a final version as of last Friday?) until late was intentional to make it harder to claim the credit. In order to cut down on the massive fraud they had last year?

[jainen]

>>the IRS is stalling their refund with no basis for doing so<<

Come on folks--we are all taxpayers with a desire for efficient government operations. In my opinion it is reasonable for the IRS to expect us to use up-date-forms, and it is not reasonable for us to expect them to roll out a major revision in less than a few weeks. There is also a new 1040-X in the pipeline, so give it some time. You may have noticed that it always takes at least several months to amend for a prior year refund anyway.

[rick in cal]

Jainen, The clients' return was filed using the forms that were current at the time of filing >>up-to-date-forms<<. The IRS are saying we have to use the new version of the form and refile but there is no new version. Common sense would seem to dictate that you don't retire a form without having its replacement available for filing.

[kcjenkins]

Not only that, but the instructions for the new form clearly say it is to be used ONLY for purchases after the date of the change.

[jainen]

.

>>Common sense would seem to dictate that you don't retire a form without having its replacement available for filing. <<

I don't think of common sense in terms of dictating anything, but I do think of the tax code that way. The code changed late in the year. The IRS doesn't have a lot of extra resources available to prepare advance alternatives for everything that might happen, so it has to wait until Congress acts.

But it's a bit much for a tax professional to pretend surprise that the IRS is moving very cautiously on this credit. We've covered that topic extensively in this forum, and it's also been all over the news because reporters love to rant about tax cheats. Even you Rick in Cal admitted you were reading about "the new package going through Congress."

Chowdahead, who started this thread, has numerous times referred to IRS and other commentary on this credit, once even quoting CNN Money. Now he is using his research to point out an interesting loophole, but he's not rushing to amend the old return.

[TAXBILLY]

Not only that, but the instructions for the new form clearly say it is to be used ONLY for purchases after the date of the change.

Seems clear to me to be the opposite. It doesn't say only for homes purchased after Nov 6:

This revision of Form 5405 can be used to claim the credit only in the following situations:

You are claiming the credit on your 2008 original or amended return for a home you purchased in 2009.

You are claiming the credit on your 2009 original or amended return for a home purchased in 2009 or 2010.

taxbilly

[Kea]

ATX has now added the revised 5405 to the 2009 return. (Original form not included.) My client purchased a new home Nov 15 and wants to amend the 2008 tax return. I guess I can do everything in 2008 using the old form (they meet all the old requirements) and then just substitute in the 5405 from the 2009 program.

Seems cumbersome, but do-able. I would prefer to do the whole amendment in the 2008 program. I guess it might be difficult for ATX to send an update to last year's program this late. Not sure of their procedures.

Does anyone know if they plan to add it to the 2008 program?

Thanks

[TAXBILLY]

Unless there is a monetary advantage to amending 2008 you are probably better off putting it in the 2009 return.

taxbilly

[Kea]

Agreed. However if they are getting a refund on the 2009, they may prefer to amend 2008 so as not to delay the 2009 refund. At this point, the 2009 return will probably be done soon anyway. If they would owe for 2009, then the credit could flip it to a refund. Might as well wait to see which makes more sense. This is a new client so I don't know much about their tax situation yet.

Thanks