How To Get the First Time Buyer Home Tax Credit

Introduction

If you have decided to purchase a new home, then you should know that you may be able to get the first time home buyer tax credit at the end of the year. Some people may be confused when they hear this amount and think they they will get that amount refunded back to them at tax time, however this is not how the tax credits work. A first time home buyer tax credit means that you are able to get a deduction up to a certain amount, and this amount is deducted off your total income that you have made for the year. One of the many advantages of doing this is it may possibly place your family into a lower tax bracket, which essentially means more money back and in your pocket.

Step 1

To make sure that you are eligible for this tax credit, you must check with the IRS or internal revenue service to see what dates the home has to be closed by. This "close by" date is when all the paperwork is final on the home, and the hone is officially yours.

Step 2

You need to check all IRS guidlines and make sure that you are a qualified first time home buyer to get the first time home buyer tax credit. If you are found nto not be eligable and get this tax credit anyhow, you will be responsiable for paying back this money to the IRS out of your pocket for the full amount.

Step 3

Depending on the date that your home closes and when you file taxes you need to decide when to claim the first time home buyer tax credit. You may be able to file an amendment on your current year tax returns, however if you purchased after a certain date you may not be able to and should wait until the following years tax return to file for the first time home buyer tax credit.

Step 4

Once you have decided which year that you would like to apply to get your first time home buyer tax credit in, there are a few more steps that you will need to take to ensure you will claim the credit. You will need to fill out a IRX tax form called a Form 5405 that is available from the IRS website or by paper copy to determine the total amount of the first time home buyer tax credit that you are able to receive. You also may need to file an amendment on your current return if it has already been filled out, or you will want to wait and apply the first time home buyer tax credit the following fiscal tax year.

Step 5

Fill out Form 5405 to determine the amount of your available credit, and file amended return for your 2008 taxes, or wait and apply to credit when you file your 2009 tax return.

Tips

When filing always make sure that you read all of the IRS rules on their website before proceeding.

Comments

Most Recent Articles