How do I claim the tax credit?


Complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on Line 69 of their 1040 income tax return.

 

I purchased my new home in 2009 but before the bill was passed but I’ve already filed for the old $7,500 tax credit on my 2008 tax returns. Can I change to the $8,000 tax credit?


File an amended 2008 tax return with a 1040X form. Consult a tax advisor to ensure you file this return correctly.

 

Is it possible to take the credit on my 2008 return so I can use it as a down payment on a home I intend to purchase before December 1, 2009?


A prospective buyer who believes they qualify for the tax credit is permitted to reduce their income tax withholding. This will enable the buyer to build cash savings to use as a down payment (or however else you see fit) by raising take home pay.

Buyers should adjust their withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

Further, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. Some state housing finance agencies, such as the Missouri Housing Development Commission, have introduced programs that provide short-term credit acceleration loans that may be used to fund a downpayment. Prospective home buyers should inquire with their state housing finance agency to determine the availability of such a program in their community.”

 

Read more on this at http://www.federalhousingtaxcredit.com/