Home Buyer Tax Credit Cash: 7 Things You Need to Know When Filing for the Home Buyer Tax Credit
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The $8,000 first-time home buyer tax credit was included in the American Recovery and Reinvestment Act of 2009. It was widely seen as a terrific opportunity for Americans who might never otherwise have the money for a down payment to get into their own homes.
Unfortunately, the first-time home buyer tax credit program quickly became a bureaucratic nightmare. The IRS was unprepared for the volume of paperwork flooding into their service centers.
Some 1.8 million home buyer refund tax returns were processed in one year, causing a tremendous delay in processing tax credits and issuing checks (or making direct deposits).
How long will you wait for your home buyer tax credit?
Assuming you have included all the required documents in your printed tax return and the IRS has no questions, here’s how long IRS spokesman Eric Smith says you’ll wait for your home buyer tax credit cash:
That doesn’t sound too bad. Unfortunately, it’s not the reality we are seeing in our office or hearing from our colleagues.
When you file your regular 2009 tax return containing a Form 5405 First-Time Homebuyer Credit, the IRS will send your regular refund immediately. Your home buyer tax credit refund will be held for several weeks until your paperwork is verified. With no questions from the IRS, the refund will appear in six weeks.
But IRS staff seem to be rejecting tax returns quickly, some for no logical reason. Many taxpayers have to then resubmit their tax returns. Taxpayers are frightened, thinking they are being investigated.
Here are seven ways to avoid the home buyer tax credit rejection trap:
Incidentally, do not call the Taxpayer Advocate Service (TAS) for help if you are experiencing odd delays. Everyone else is in the same boat. The TAS cannot help you.
Eva Rosenberg, EA is the publisher of TaxMama.com, where your tax questions are answered. Eva is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com.
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