How to File Taxes for the First Time Homebuyers Credit - Updated

New Information Here

This article provides updated information on claiming the First Time Homebuyers Credit as a result of recent changes passed by Congress. It allows you to get the the same amount of money, but with fewer restrictions.

Things You'll Need

• IRS Form 5405
• A calculator
• A pen
• Your HUD Settlement statement from your home purchase.

Instructions

1. The first thing to do is gather your materials. The original article showed you how to amend your 2008 tax return to get the credit immediately. Since it is so close to the 2009 tax season, and amended returns take so long to come in, you should wait and file it with your 2009 tax return - you'll get the money faster. Your HUD statement is the two column legal size page that lists what was paid by the buyer and what by the seller for your home purchase (it is usually one of the first forms in the pile of paper given to you at closing.) The tax forms are available from the IRS or you can download them from the following links:

   http://www.irs.gov/pub/irs-pdf/f5405.pdf

2. The next step is to verify you are eligible for the credit. In order to claim the credit for a 2009 home purchase:
   You must purchase a home, that you will use as your Main Home, between Jan 1, 2009 and Apr 30, 2010 (extended date.)
   You (nor your spouse if filing together) must not have owned a Main Home anytime in the last 3 year period preceding the purchase of this home (You can now get a $6500 credit if you were a "long-time" resident - I will write an article for that one soon.)
   Your adjusted gross income must be <$125000 (or $225000 if married filing jointly) - updated limits.
   You cannot be a non-resident alien
   You cannot have purchased the home using DC 1st Time Homebuyer Credit
   You cannot have purchased the home from a relative
   You cannot have acquired the home by gift or inheritance
   The home must be in the United States

   Notice that owning a home in the last 3 years doesn't make you ineligible - it has to be your Main Home. A vacation property or a property you rent to someone else does not exclude you from using the credit.

3. Now you need to fill out the Form 5405.
   -The name, SSN and address are self explanatory (make sure the name and SSN match the original 2008 return.)
   -Date acquired should match Block 'I' from your HUD statement.
   -Check the box in Part I, C of the form (these instructions are for claiming the credit for a 2009 purchase on your 2008 return.)
   -Line 1 should be $8000 or %10 of the price of the home (use Line 101 from the HUD statement for the price) whichever is smaller (if you purchased the home with someone else who is not your spouse on the return - allocate the credit in any reasonable way that would not cause both people combined to claim more than $8000, and don't try to cheat it to give more credit than deserved just because the other person is ineligible to claim the credit.
   -Line 2 is generally the Adjusted Gross Income from your 2008 return. It is usually the last line on the front page of the return and will specifically say "This is your adjusted gross income." If you have income from Puerto Rico or file Form 2555 or 4563 - consult a tax expert.
   -Do the math for lines 3, 4, 5 and 6 as the Form instructs and you will have your credit amount.

4. Continue filing taxes and include the credit amount you calculated on the credit line of the form 1040(A).

Tips & Warnings

• You must stay in your new home as your principle residence for at least 3 years from the date of purchase. If you do not, you may have to repay the credit.

• The 5405 linked to is only for homes purchased before 11/6/09. The IRS will publish a new form, and I will update the links to it when it comes out.

Resources

• IRS page for First Time Homebuyers Credit
• IRS Form 5405
• Original Article