IRS Patrol: Home Buyer Credit – Closing Deadline Extended

Posted on July 5, 2010 by Stacie Clifford Kitts

Well, I’m a bit late in my reporting of this extension.  Sorry about that.  We’ve just returned from a really great vacation visiting the grand-baby.

So here it is:

The deadline for the completion of qualifying First-Time Homebuyer Credit purchases has been extended. Taxpayers who entered into a binding contract before the end of April now have until September 30, 2010 to close on the home.

The Homebuyer Assistance and Improvement Act of 2010, enacted on July 2, 2010, extended the closing deadline from June 30 to Sept. 30 for eligible homebuyers who entered into a binding purchase contract on or before April 30 to close on the purchase of the home on or before June 30, 2010.

Here are five facts from the IRS about the First-Time Homebuyer Credit and how to claim it.

  1. If you entered into a binding contract on or before April 30, 2010  to buy a principal residence located in the United States you must close on the home on or before September 30, 2010.
  2. To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
  3. To be considered a long-time resident homebuyer, your settlement date must be after November 6, 2009 and you and your spouse – if you are married – must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased.
  4. The maximum credit for a first-time homebuyer is $8,000. The maximum credit for a long-time resident homebuyer is $6,500.
  5. To claim the credit you must file a paper return and attach Form 5405, First Time Homebuyer Credit, along with all required documentation, including a copy of the binding contract. New homebuyers must attach a copy of the properly executed settlement statement used to complete the purchase. Long-time residents are encouraged to attach documentation covering the five-consecutive-year period such as Form 1098, Mortgage Interest Statements, property tax records or homeowner’s insurance records.

For more information about the First-Time Homebuyer Tax Credit and the documentation requirements, visit IRS.gov/recovery.

Filed under: FIRST TIME HOME BUYERS CREDIT, HOMEBUYER CREDIT, IRS, IRS PATROL, TAX CREDITS | Tagged: , , , , | 1 Comment »

IRS Presents: Homebuyer Credit Documentation Facts

Posted on February 25, 2010 by Stacie Clifford Kitts

Stacie says:  Unless you have lived under a rock for the last few months, you know that last year there were issues with taxpayers fraudulently claiming the homebuyers credit.  As a result, the IRS has some new requirements.  Check out this information on what you should attach to your tax return if you are claiming this credit.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Claiming the First-Time Homebuyer Tax Credit on your 2009 tax return might mean a larger refund but it can seem complex. Are you confused about the documentation requirements? The IRS recognizes that the settlement documents can vary from location to location, so here are five tips to clarify the documentation requirements.

  1. Settlement Statement: Purchasers of conventional homes must attach a copy of Form HUD-1 or other properly executed Settlement Statement.
  2. Properly Executed Settle Statement: Generally, a properly executed settlement statement shows all parties’ names and signatures, property address, sales price and date of purchase. However, settlement documents, including the Form HUD-1, can vary from one location to another and may not include the signatures of both the buyer and seller. In areas where signatures are not required on the settlement document, the IRS encourages buyers to sign the settlement statement when they file their tax return — even in cases where the settlement form does not include a signature line.
  3. Retail Sales Contract: Purchasers of mobile homes who are unable to get a settlement statement must attach a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
  4. Certificate of Occupancy: For a newly constructed home, where a settlement statement is not available, attach a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
  5. Long-Time Residents: If you are a long-time resident claiming the credit, the IRS recommends that you also attach documentation covering the five-consecutive-year period such as Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

For more information about the First-Time Homebuyer Tax Credit and the documentation requirements, visit IRS.gov/recovery.

Links:

YouTube Videos:

Filed under: FIRST TIME HOME BUYERS CREDIT, HOMEBUYER CREDIT, IRS, IRS PRESENTS, TAX CREDITS | Tagged: , , , , , | Leave a Comment »

IRS Presents: Seven Important Facts about Claiming the First-Time Homebuyer Credit

Posted on February 20, 2010 by Stacie Clifford Kitts

If you purchased a home in 2009 or early 2010, you may be eligible to claim the First-Time Homebuyer Credit, whether you are a first-time homebuyer or a long-time resident purchasing a new home.

Here are seven things the IRS wants you to know about claiming the credit:

  1. You must buy – or enter into a binding contract to buy – a principal residence located in the United States on or before April 30, 2010. If you enter into a binding contract by April 30, 2010, you must close on the home on or before June 30, 2010.
  2. To be considered a first-time homebuyer, you and your spouse – if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
  3. To be considered a long-time resident homebuyer you and your spouse – if you are married – must have lived in the same principal residence for any consecutive five-year period during the eight-year period that ended on the date the new home is purchased. Additionally, your settlement date must be after November 6, 2009.
  4. The maximum credit for a first-time homebuyer is $8,000. The maximum credit for a long-time resident homebuyer is $6,500.
  5. You must file a paper return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit with additional documents to verify the purchase. Therefore, if you claim the credit you will not be able to file electronically.
  6. New homebuyers must attach a copy of a properly executed settlement statement used to complete such purchase. Buyers of a newly constructed home, where a settlement statement is not available, must attach a copy of the dated certificate of occupancy. Mobile home purchasers who are unable to get a settlement statement must attach a copy of the retail sales contract.
  7. If you are a long-time resident claiming the credit, the IRS recommends that you also attach any documentation covering the five-consecutive-year period, including Form 1098, Mortgage Interest Statement or substitute mortgage interest statements, property tax records or homeowner’s insurance records.

For more information about these rules including details about documentation and other eligibility requirements visit IRS.gov/recovery.

Links:

YouTube Video:

Filed under: FIRST TIME HOME BUYERS CREDIT, HOMEBUYER CREDIT, IRS, TAX CREDITS | Tagged: , , , , , , | Leave a Comment »

IRS Patrol: New Homebuyer Credit Form Released; Taxpayers Reminded to Attach Settlement Statement and Other Key Documents Form 5405

Posted on February 1, 2010 by Stacie Clifford Kitts

New Homebuyer Credit – Claim It: English | Spanish
New Homebuyer Credit – Military: English
For these and other videos: YouTube/IRSVideos

WASHINGTON — [Last week] The Internal Revenue Service [] released the new form that eligible homebuyers need to claim the first-time homebuyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time homebuyer credit.

The new form and instructions follow major changes in November to the homebuyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions, eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the homebuyer credit.

Some of these early taxpayers claiming the homebuyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

  • A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
  • For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
  • For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

In addition, the new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

  • Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
  • Property tax records or
  • Homeowner’s insurance records.

The IRS also reminded homebuyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit will be issued toward the end of March.

The IRS encourages taxpayers to use direct deposit to speed their refund. In addition, taxpayers can use Where’s My Refund? on IRS.gov to track the status of their refund.

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

Filed under: FILING YOUR TAX RETURN, FIRST TIME HOME BUYERS CREDIT, FORM 5405, HOMEBUYER CREDIT, IRS, IRS PATROL | Tagged: , , , , | Leave a Comment »

More on This Topic From the IRS – Yet Again -10 Important Facts about the Extended First-Time Homebuyer Credit

Posted on December 3, 2009 by Stacie Clifford Kitts

[Stacie says: Boy the IRS is really bombarding us with the rules on the extended homebuyers credit. Do you think they are worried that taxpayers are going to get it wrong - again?]

If you are in the market for a new home, you may still be able to claim the First-Time Homebuyer Credit. Congress recently passed The Worker, Homeownership and Business Assistance Act Of 2009, extending the First-Time Homebuyer Credit and expanding who qualifies.

Here are the top 10 things the IRS wants you to know about the expanded credit and the qualifications you must meet in order to qualify for it.
You must buy – or enter into a binding contract to buy a principal residence – on or before April 30, 2010.

If you enter into a binding contract by April 30, 2010 you must close on the home on or before June 30, 2010.

For qualifying purchases in 2010, you will have the option of claiming the credit on either your 2009 or 2010 return.

A long-time resident of the same home can now qualify for a reduced credit. You can qualify for the credit if you’ve lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the new home is purchased and the settlement date is after November 6, 2009.

The maximum credit for long-time residents is $6,500. However, married individuals filing separately are limited to $3,250.

People with higher incomes can now qualify for the credit. The new law raises the income limits for homes purchased after November 6, 2009. The full credit is available to taxpayers with modified adjusted gross incomes up to $125,000, or $225,000 for joint filers.

The IRS will issue a December 2009 revision of Form 5405 to claim this credit. The December 2009 form must be used for homes purchased after November 6, 2009 – whether the credit is claimed for 2008 or for 2009 – and for all home purchases that are claimed on 2009 returns.
No credit is available if the purchase price of the home exceeds $800,000.

The purchaser must be at least 18 years old on the date of purchase. For a married couple, only one spouse must meet this age requirement.

A dependent is not eligible to claim the credit.

For more information about the expanded First-Time Home Buyer Credit, visit IRS.gov/recovery.

Links:
First-Time Homebuyer Credit
IR-2009-108, First-Time Homebuyer Credit Extended to April 30, 2010; Some Current

Homeowners Now Also Qualify

YouTube Videos:
Recovery: New Homebuyer Credit – November 2009
Consejo Tributario: Consejos Tributarios de Fin de Año Noviembre 2009

Filed under: FILING YOUR TAX RETURN, FIRST TIME HOME BUYERS CREDIT, HOMEBUYER CREDIT, WORKER HOMEOWNERSHIP AND BUSINESS ASSIST ACT | Leave a Comment »

Some More Info on The Homebuyer Credit

Posted on November 26, 2009 by Stacie Clifford Kitts

[Stacie says: although I did summarize this information in earlier posts here, this is a good breakdown of the Homebuyers Credit.]

WASHINGTON — A new law that went into effect Nov. 6 extends the first-time homebuyer credit five months and expands the eligibility requirements for purchasers.

The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase.

The maximum credit amount remains at $8,000 for a first-time homebuyer –– that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.
But the new law also provides a “long-time resident” credit of up to $6,500 to others who do not qualify as “first-time homebuyers.” To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.

For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.

A new version of Form 5405, First-Time Homebuyer Credit, will be available in the next few weeks. A taxpayer who purchases a home after Nov. 6 must use this new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return.

A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405.

Income Limits Rise

The new law raises the income limits for people who purchase homes after Nov. 6. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.

For homes purchased prior to Nov. 7, 2009, existing MAGI limits remain in place. The full credit is available to taxpayers with MAGI up to $75,000, or $150,000 for joint filers. Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.

New Requirements

Several new restrictions on purchases that occur after Nov. 6 go into effect with the new law:

    Dependents are not eligible to claim the credit.No credit is available if the purchase price of a home is more than $800,000.A purchaser must be at least 18 years of age on the date of purchase.

For Members of the Military

Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

For more details on the credit, visit the First-Time Homebuyer Credit page on IRS.gov.

Related Items:
IRS YouTube Videos:
New Homebuyer Credit
Consejo Tributario: Consejos Tributarios de Fin de Año

Filed under: FIRST TIME HOME BUYERS CREDIT, HOMEBUYER CREDIT, IRS PATROL, TAX CREDITS, WORKER HOMEOWNERSHIP AND BUSINESS ASSIST ACT | Leave a Comment »

More on the Worker, Homeownership, and Business Assistance Act of 2009

Posted on November 20, 2009 by Stacie Clifford Kitts

Here is an expanded outline on how the Worker, Homeownership, and Business Assistance Act of 2009 may affect some businesses (this outline does not include all the provisions of the act). Click here to read the bill as passed by both the House and the Senate.

  1. Allow for a 5 year carryback of 2009 NOLs
    1.  
        i. Small business will be exempt from the 1 election rule. Thus small business claiming the 5 year carryback for 2008 losses can still elect 5 year carryback for 2009 losses

      2. a. Removes the small business requirement
      b. Offset 50% of taxable income in 5th prior year
      c. Offset 100% of taxable income in 4th thru 1st prior years
      d. Only 1 election allowed (either for fiscal years beginning in 2008 or fiscal years beginning in 2009)

  2. Homebuyer credit
    1.  
        i. If using binding contract rule – must close by July 1, 2010

      2. a. Extended for purchases (binding contracts entered into by) through 4/30/2010b. Recapture waived for 2009 purchases
      c. Credit = lesser of 10% of purchase price or $8,000.
      d. Credit phases out for modified agi between $125k and $145k ($225k and $245k for married joint returns.)
      e. Can elect to treat 2009 purchases as if made in 2008 and claim credit on 2008 return
      f. Need not be a new buyer

        i. Existing homeowners living in current residence for at least 5 consecutive years during 8 year period ending on date of purchase are eligible for credit
        ii. Must live in new home for at least 3 years
        iii. Credit reduced to $6,500

      g. Limitations

        i. Purchase price must be < $800,000 ii. Skip buying a house for the kids – no credit allowed if can be claimed as a dependent of another taxpayer iii. No credit for taxpayers under 18 1. Emancipated minors out of luck unless one is at least 18

      h. MUST attach copy of settlement statement to the return

  3. Penalty for failure to file partnership or s corp returns increased to $195 per partner/shareholder per month beginning with 2010 returns.
  4. Electronic filing mandate
      a. Must use efile if preparing at least 10 individual income tax returns
      b. Individual income tax returns means returns for individuals, estates & trusts
  5. Large Corporation estimated tax payments increased to 100.58% for payments due in July, August or Sept.
      a. Large corporation is a corporation with at least $1b in assets at the end of the preceding tax year.

Filed under: FIRST TIME HOME BUYERS CREDIT, HOMEBUYER CREDIT, NET OPERATING LOSS, WORKER HOMEOWNERSHIP AND BUSINESS ASSIST ACT | Leave a Comment »

Last Day To Purchase a Home and Qualify for The First Time Homebuyers Credit is November 30, 2009

Posted on October 9, 2009 by Stacie Clifford Kitts

First-Time Homebuyer Credit Provides Tax Benefits to 1.4 Million Families to Date, More Claims Expected.

WASHINGTON — With the deadline quickly approaching, the Internal Revenue Service today reminded potential homebuyers they must complete their first-time home purchases before Dec. 1 to qualify for the special first-time homebuyer credit. The American Recovery and Reinvestment Act extended the tax credit, which has provided a tax benefit to more than 1.4 million taxpayers so far
.
The credit of up to $8,000 is generally available to homebuyers with qualifying income levels who have never owned a home or have not owned one in the past three years. The IRS has a new YouTube video and other resources that explain the credit in detail.

The IRS encouraged all eligible homebuyers to take advantage of the first-time homebuyer credit but at the same time cautioned taxpayers to avoid schemes that help ineligible people file false claims for the credit. Currently, the agency is investigating a number of cases of potential fraud and is using computer screening tools to identify questionable claims for the credit.
Because the credit is only in effect for a limited time, those considering buying a home must act soon to qualify for the credit. Under the Recovery Act, an eligible home purchase must be completed before Dec. 1, 2009. This means that the last day to close on a home is Nov. 30.
The credit cannot be claimed until after the purchase is completed. For purchases made this year before Dec. 1, taxpayers have the option of claiming the credit on their 2008 returns or waiting until next year and claiming it on their 2009 returns.

For those considering a home purchase this fall, here are some other details about the first-time homebuyer credit:

The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing jointly. The limit is $4,000 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $80,000 or more.

The credit reduces the taxpayer’s tax bill or increases his or her refund, dollar for dollar. Unlike most tax credits, the first-time homebuyer credit is fully refundable. This means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
Only the purchase of a main home located in the United States qualifies. Vacation homes and rental properties are not eligible.

A home constructed by the taxpayer only qualifies for the credit if the taxpayer occupies it before Dec. 1, 2009.

The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on the taxpayer’s modified adjusted gross income (MAGI). MAGI is adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the range is $75,000 to $95,000. This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

The credit must be repaid if, within three years of purchase, the home ceases to be the taxpayer’s main home. For example, a taxpayer who claims the credit based on a qualifying purchase on Sept. 1, 2009, must repay the full credit if he or she sells the home or converts it to business or rental use at any time before Sept. 1, 2012.

Taxpayers cannot take the credit even if they buy a main home before Dec. 1 if:
The taxpayer’s income is too large. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

The taxpayer buys a home from a close relative. This includes a home purchased from the taxpayer’s spouse, parent, grandparent, child or grandchild.

The taxpayer owned another main home at any time during the three years prior to the date of purchase. For a married couple filing a joint return, this requirement applies to both spouses.

For example, if the taxpayer bought a home on Sept. 1, 2009, the taxpayer cannot take the credit for that home if he or she owned, or had an ownership interest in, another main home at any time from Sept. 2, 2006, through Sept. 1, 2009.

The taxpayer is a nonresident alien.

For details on claiming the credit, see Form 5405, First-Time Homebuyer Credit.

Filed under: AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009, FIRST TIME HOME BUYERS CREDIT, TAX CREDITS | Leave a Comment »

There’s Nothing Like Free CPE – Here’s How To Get Some

Posted on September 30, 2009 by Stacie Clifford Kitts

[Stacie says: You don't need to be a tax professional to learn how to take advantage of the tax laws. The IRS offers free online classes to help taxpayers and professionals to learn more. Why not sign up? In fact, if you are a college student, here is a way to beef up your resume. It's free, its convenient, heck - why not?]

WASHINGTON — Experts from the Internal Revenue Service and the tax preparation industry will discuss the many tax credits, deductions and incentives contained in the American Recovery and Reinvestment Act for 2009 on the Oct. 6 Internet airing of Tax Talk Today.

The American Recovery and Reinvestment Act contained benefits for:
First-time homebuyers
People purchasing new cars
Energy efficient home upgrades
Parents and students paying for college

The October program for qualifies for one CPE credit for tax professionals. To access the web cast at no charge, viewers can register online at Tax Talk Today.

Panelists include: Virginia M. Tarris, IRS tax law specialist; Amy Stanton, IRS program manager; CPA Gerard H. Schreiber, Jr, partner, Schreiber and Schreiber; and CPA and attorney Donna Rodriguez, managing partner, Donna L. Rodriguez, PLLC. The moderator is Les Witmer.

Tax Talk Today is a free, live, interactive webcast aimed at educating tax professionals on the most contemporary and complex tax issues. Viewers are encouraged to submit questions during the live broadcast. Tax professionals in need of continuing education credits should select Continuing Education at the Web site for more information.

They can view Tax Talk Today with Windows Media Player and Real Player; both are free software that may already be installed on your computer. If not, click the link for Installing System Software to view Internet Broadcast under “How to View.”

Subscribers can view live web casts as well as archived programs; listen to audio podcasts or read show transcripts through Dec. 31, 2009. Subscribers also can order audio and video recordings. A transcript and audio of the July 14 Webcast, “OPR: A Balanced Approach,” is now available.

Filed under: AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009, CPE, FIRST TIME HOME BUYERS CREDIT, TAX TALK | Leave a Comment »

Highlights From The Stupid Preparer Files

Posted on September 11, 2009 by Stacie Clifford Kitts


By Stacie Clifford Kitts, CPA

Here is my latest addition of the stupid preparer files. Again – mind boggling. This preparer tried to scam something as stupid and easy to track as buying a house. The thing that is most disturbing about this case, is the fact that this guy thought he could get away with it.

Today the Internal Revenue Service announced that it has successfully prosecuted James Otto Price III for falsely claiming the first-time home-buyers credit on a clients federal income tax return. Mr. Price faces up to three years in jail and a $250,000 fine.

The IRS warns potential fraudsters to beware as they have implemented technology that automatically searches for and identifies potential fraudulent claims. The IRS currently has 24 open criminal investigations and has issued seven search warrants related to the fraudulent use of the credit.

“We will vigorously pursue anyone who falsely tries to claim this or any other tax credit or deduction,” said Eileen Mayer, Chief, IRS Criminal Investigation. “The penalties for tax fraud are steep. Taxpayers should be wary of anyone who promises to get them a big refund.”

Taxpayers are reminded that even if they utilize a paid preparer, the taxpayer is still responsible for the accuracy of the return.

The IRS says:

“The First-Time Homebuyer Credit, originally passed in 2008 and modified in 2009, provides up to $8,000 for first-time homebuyers. The purchaser, however, must qualify as a first-time homebuyer, which for purposes of this credit means someone who has not owned a primary residence in the past three years. If the taxpayer is married, this requirement also applies to the taxpayer’s spouse. The home purchase must close before Dec. 1, 2009, to qualify, and the credit may not be claimed on the purchaser’s tax return until after the taxpayer closes and has purchased the home. Different rules apply for homes bought in 2008.”

Filed under: ACCOUNTANT, BAD ADVICE, COMMENTARY, FILING YOUR TAX RETURN, FIRST TIME HOME BUYERS CREDIT, STUPID PREPARER FILES, TAX CREDITS | Leave a Comment »

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