Buying a home could earn you a tax credit of up to $8,000. But don't stand by the mailbox waiting for your check.
Just got this question from a TV news viewer:
My name is Freda. I closed on my house this past May. I did everything that the IRS required of me to do to get the tax credit check. It has now been 12 weeks since I mailed my paper work to the IRS, but as yet I have yet to receive a check of $8000.00.
I have sent an e-mail to the president also my state senators here in Alabama, I have yet to receive a reply from any of the three, asking them to see what the problem is with the IRS not getting the checks out like I was led to believe, which was supposed to be 6 to 8 weeks, then it was changed to 8 to 12 weeks, although a guy I work with mailed his paper work in March, and still does not have his $8000.00. I was under the impression that the IRS worked for the American People. I just wondered if you know how to go about checking on this without me having to call the IRS and being put on hold and then getting the phone hung up in your ear without ever talking to anyone.
I watch you on my local station out of Huntsville Al WAAY TV and really enjoy your tips.
Thank you for listening to my gripe. Any help would be greatly appreciated as I am sure I am not the only who would like this question answered.
Here’s your answer, Freda!
As the name implies, the First Time Home Buyer Tax Credit is, well, a tax credit. It’s not a tax credit “check”. In other words, it doesn’t just show up in the mail. A tax credit means that when you file your income taxes next January, you’ll claim the credit on your tax forms, which will then reduce the amount of tax you owe Uncle Sam – in this case by up to $8,000.
A little more about the credit from the IRS website:
The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009 or early 2010) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 in 2009 or early 2010). Long-time homeowners who buy a replacement home after Nov. 6, 2009, or in early 2010 may qualify for a credit of up to $6,500, or $3,250 for a married person filing a separate return.
When you file your income taxes for 2010, Freda, you’ll file this form with your 1040 tax form to let the IRS know you qualify for the credit. If you use a paid preparer to do your taxes, just tell them about the house: they’ll know what to do. Same story if you use software: it will ask if you bought a house, you’ll answer yes, it will automatically file the right form to get your credit.
After filing your return, you’ll receive your credit by either paying less income tax or getting a bigger tax refund. That may not seem as good as getting a check in the mail. But don’t feel ripped off, because at the end of the day, I promise you’ll end up $8,000 richer. So don’t get mad at the President, Congress or the IRS. At least, not about this particular issue.
Here’s the IRS web page with questions and answers regarding the credit: it’s written in fairly user-friendly language – check it out.