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Step 1
Find a home to that you are interested in buying that fits within in your budget. Even if you do get the $8,000 first time home buyer credit, you should not count on this money until you actually are approved for it. It is smarter to find a house that you can afford and then the added $8000 is simple a bonus for you. The tax credit is only for homes that cost $800,000 or less.
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Step 2
Look over your income to see if you are within the income limits for the tax credit. A single person can make up to $75,000 a year and a couple can bring in $150,000 a year. If you do make more than the income limit for the first time home buyer tax credit, you will not qualify for the full amount of the money but may still be able to get a portion of the tax credit for the purchase of your new home.
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Step 3
To claim the money for the tax credit right away instead of waiting till the next year to file for your taxes, reduce your income tax withholding from your place of employment. This allows a first time home buyer to take home more pay and apply that money towards a down payment for the house instead of having to wait until 2011 to file taxes for 2010. A person can reduce their income tax through their employer, but know that any money that you may get that is beyond the scope of the home tax credit, you will have to pay back to the IRS during tax time.
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Step 4
Claim the tax credit on your federal income tax papers. If you did not adjust your income taxes, then you get your first time home buyer tax credit by claiming it on your tax forms at the end of the year. First time home buyers should fill out IRS Form 5405 to determine the amount of the tax credit, and then claim the tax credit on their 1040 income tax form for the year 2010.
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Step 5
Work with an accountant if you are having trouble with trying to claim your first time home buyer tax credit. They can help you fill out the proper paperwork and let you know if you do indeed qualify for the full $8000.
