I participated in a live chat with Turbo Tax VP, and Certified Public Accountant Bob Meighan today. I had two pointed questions for him:
BRADY:. What if a buyer's federal tax obligation is less than the tax
credit? Does the buyer receive the full amount or just an amount up to
his/her federal tax obligation?
MEIGHAN. The homebuyer credit is a "refundable" credit, which means that you get the full credit regardless of your tax liability. In other words, the IRS will send you a check if your credit is more than the tax liability/withholding.
BRADY. If the transaction closes on or after Jan 2, 2010, can the home buyer still claim the tax credit on their 2009 tax return? If the transaction closes after April 15, 2010 (but before June 30, 2010), would they file an amended return for 2009?
MEIGHAN. The beauty of the homebuyer credit is that you can get the credit dollars pretty fast. So, if you purchase in 2010, you have the option to claim the credit on your 2009 return (either the originally filed one or even an amended return). By doing so, you get your credit dollars now (or relatively soon) versus having to wait to claim the credit on your 2010 tax return (which would be filed in 2011).
Other questions asked in the chat about the Homebuyer Tax Credit:
Q. What will be the earliest day I will be able to file online this year?
MEIGHAN. TurboTax Online is up and running now. While not all IRS forms are final yet, most should be final by January 1, 2010. So get ready and get going. By the way, if you'll be claiming one of the homebuyer credits, you may have to wait a few weeks because the credit form for this won't be final from the IRS until sometime in January.
Q. Can you tell folks the top 3 things EVERYONE should know about this credit....at a very high level?
MEIGHAN: Three things you need to know about the homebuyer credit:
1. The credit is available to first time AND existing homebuyers. The credit amounts are $8000 and $6500 respectively. And pay attention to the rules. For example, a first time buyer simply means you have not owned a principal residence in the last three years.
2. The purchase date has been extended to June 30, 2010, but you have to have a signed contract in place by April 30, 2010.... See More
3. Those claiming a homebuyer credit on their 2009 return will have to paper file the return. The IRS will NOT accept the return electronically because they need a copy of your settlement statement to substantiate your purchase. Having to file a paper copy of your return is big disappointment because it will delay your refund from days to weeks.
Q. Would a current homeowner be eligible for the extended Homebuyer
Credit if they purchased a second home in another state this year? They
did not sell their current home, but were told by their Realtor that
they can claim the credit.
MEIGHAN. As long as you owned and lived in the existing home for at least five consecutive years of the eight years prior to the purchase date of your new home, you may qualify. There are other requirements like income and purchase price, but otherwise you should qualify. By the way, there is no requirement that you sell your existing home.
Q. Can a home buyer file with TurboTax.com with the home buyers credit?
A. You can use any version of TurboTax to claim the first time homebuyer credit. However, you won't be able to file until sometime in January when the IRS releases the final form for claiming this credit. Also, those claiming the credit will have to paper file their return because of the IRS requirement to attach your closing statement. This paper filing requirement is true for ALL filers, regardless of whether you use tax software or go to a pro.
For more information, read the December 17, 2009 TurboTax Blog post about the home buyer tax credit.
To purchase Turbo Tax for 2009, click here
