Homebuyer Tax Credit Causes Confusion
Prospective Homebuyers Should Read Credit Carefully, MU Expert Says
April 12th, 2010
Andrew Zumwalt
COLUMBIA, Mo. — As many last-second tax filers scramble to meet the April 15th deadline for tax returns, several tax credits are creating confusion for filers. A University of Missouri tax expert says much of the mix-up stems from the homebuyer tax credit, which has undergone several changes over the past few years. Andrew Zumwalt, a University of Missouri Extension associate state specialist in the Personal Financial Planning department at the College of Human Environmental Sciences, warns anyone who wants to claim this credit to be sure they understand all the rules.
“It is very important to read over the forms because there have been several changes,” Zumwalt said. “There are many rules that most people will fall under, but it is important that they aren’t tripped up by any of them.”
One of the more important changes comes in how the credit must be filed. Zumwalt says that previously, a person could claim the credit by filing online. The IRS, however, discovered some fraud and as a result, all claims must be filed on paper.
Zumwalt also says to make sure and file tax returns before the April 15th deadline, regardless of whether a contract on a new house has been signed. Zumwalt recommends that once the contract is signed, as long as it is before the end of April, the tax return can be amended to include the homebuyer credit. While the deadline for the credit is approaching, Zumwalt says there is still time to make use of it.
“All is not lost,” Zumwalt said. “Everyone has until the end of April to get a house under contract, but the sale doesn’t have to close until July 1st, so people still have some wiggle room.
The federal government enacted the homebuyer tax credit a to help stimulate a struggling national real estate market. The credit, as it stands currently, will give up to $8,000 for new homebuyers and $6,500 for long-term homebuyers. Zumwalt says much of the confusion comes from people who don’t know which group they fall under.
“If you are buying your first home, or haven’t owned a home in at least three years, than you qualify as a new homebuyer,” Zumwalt said. “The long-time homebuyer credit is a little more complicated. People need to be sure to read the credit form carefully to determine if they qualify.”
To view the homebuyer credit form online, you can visit: http://www.irs.gov/pub/irs-pdf/i5405.pdf
Andrew Zumwalt has been instrumental in founding and growing the Missouri Taxpayer Education Initiative. MoTax sites have prepared more than 20,000 returns for tax filers during the past six years. Zumwalt serves as MU campus support for the state network of Family Financial Education Specialists.