IRS wants you to e-file, except when it doesn't
Previous fraud prompts IRS to require paper documents to claim home buyer tax credit, which will delay refunds.
The IRS wants you to e-file.
In 2009, individuals e-filed a record 95 million federal tax returns, up almost 6% from 2008. That’s almost two of every three tax returns filed. By 2011, all professional preparers will be required to e-file if they do 10 or more returns.
Returns filed electronically get processed faster and are significantly less expensive for the IRS.
The IRS even provides free e-filing on its website, www.irs.gov, for those making up to $57,000.
But, sorry new home buyer, if you want to claim the home buyer credit on your 2009 tax return, the IRS won’t let you e-file.
The home buyer credit is 10% of the purchase price. First-time home buyers (those who had no interest in a principal residence for three years prior to the new purchase) can get up to $8,000. Current homeowners who meet certain criteria can get up to $6,500 on the purchase of a new house.
You can qualify for homes purchased in 2009 or even those bought by April 30, 2010 and closed by June 30, 2010. If you buy in 2010, you can amend your 2009 tax return and claim the credit this year, rather than wait for April 2011.
You can only claim the credit on homes costing no more than $800,000 and the credit phases out as your income on a joint return (technically your adjusted gross income) increases between $225,000 and $245,000. The phase-out for singles is between $125,000 and $145,000.
If you bought prior to Nov. 6, 2009, the joint return phase-out begins at $150,000. Singles start to lose the credit at $75,000.
File Form 5405 and that’s up to $8,000 more in cash in your pockets.
But, you can’t e-file.
That’s because the IRS was flooded with fraudulent returns claiming this credit. So, if you want it, the IRS wants you to pre-audit yourself. They want you to attach a signed copy of the closing statement (HUD-1) from your home purchase to your return. If you built a new home, the IRS wants to see the new certificate of occupancy (CO) that was issued. If you bought a mobile home, they want to see the contract.
But, since you can’t provide the required attachments to an e-filed return, you can’t e-file and claim the credit.
So, file a paper return.
But don’t be in too much of a rush. The IRS won’t start processing returns claiming the credit until mid-February. It needs time to reprogram its computers for the rule changes.
Even then, don’t expect refunds to be issued until late March. After all, as the IRS constantly points out -- if you want a faster refund, you should e-file.
|Tags:||federal taxIRSJeff Schnepperreal estaterefundtax breaktax creditstax preparationtax write offs|
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