FTBC 2008

[ILLMAS]

Ok I have a client coming this afternoon and they were eligible for the $7,500 credit that has to be repaid over time, I am looking at form 5405, on the second page I see the repayment section, however it seems like form is for people that sold or disposed. On Part IV, is that where I put down the amount ($500) they are paying back for next 15 years?

Thanks

MAS

[Diane]

Ok I have a client coming this afternoon and they were eligible for the $7,500 credit that has to be repaid over time, I am looking at form 5405, on the second page I see the repayment section, however it seems like form is for people that sold or disposed. On Part IV, is that where I put down the amount ($500) they are paying back for next 15 years?

Thanks

MAS

They don't have to start paying it back until 2010.

Diane

[kcjenkins]

No, you don't use that form. Bunny hop from Line 60, put the 500 on Line 28 of the worksheet.

[HV Ken]

No, you don't use that form. Bunny hop from Line 60, put the 500 on Line 28 of the worksheet.

Thanks KC - tried that, but this now throws an e-file error saying that we cannot e-file a return that includes Form 5405. Even though the 5405 is not in the return!

I guess the other question is, is Diane correct that the repayment doesn't start until tax year 2010 ?

[ILLMAS]

Yes Diane is correct, I went back to check the IRS instructions:

"However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return."

MAS

[HV Ken]

Yes Diane is correct, I went back to check the IRS instructions:

"However, the credit operates much like an interest-free loan, because it must be repaid over a 15-year period. So, for example, an eligible taxpayer who buys a home today and properly claims the maximum available credit of $7,500 on his or her 2008 federal income tax return must begin repaying the credit by including one-fifteenth of this amount, or $500, as an additional tax on his or her 2010 return."

MAS

I went and did the same research and was just going to post the same response!!!!! I found my answer in the CCH 1040 publication.