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If you are a new homebuyer and...

For those new homebuyers eligible for the tax credit you might want to send alert them to the following: 

 New Homebuyer Credit Form Released; Taxpayers Reminded to Attach Settlement

 Statement and Other Key Documents   IR-2010-6, Jan. 15, 2010 WASHINGTON —

 The Internal Revenue Service today released the new form that eligible homebuyers need

 to claim the first-time homebuyer credit this tax season and announced processing of those

 tax returns will begin in mid-February. The IRS also announced new documentation

requirements to deter fraud related to the first-time homebuyer credit. The new form and

 instructions follow major changes in November to the homebuyer credit by the Worker

, Homeownership, and Business Assistance Act of 2009. The new law extended the credit

 to a broader range of home purchasers and added new documentation requirements to

 deter fraud and ensure taxpayers properly claim the credit. With the release of Form 5405,

 First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions,

 eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the

 homebuyer credit must file a paper tax return because of the added documentation

 requirements. The IRS expects to start processing 2009 tax returns claiming the homebuyer

 credit in mid-February after it completes the updating and testing of systems to meet the

 law’s new requirements. The updates allow the IRS to put in place critical systemic checks

 to deter fraud related to the homebuyer credit. Some of these early taxpayers claiming the

 homebuyer credit may see tax refunds take an additional two to three weeks. In addition to

 filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one

 of the following documents in order to receive the credit: A copy of the settlement

 statement showing all parties' names and signatures, property address, sales price, and date

 of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.

 For mobile home purchasers who are unable to get a settlement statement, a copy of the

 executed retail sales contract showing all parties' names and signatures, property address,

 purchase price and date of purchase. For a newly constructed home where a settlement

 statement is not available, a copy of the certificate of occupancy showing the owner’s

 name, property address and date of the certificate. In addition, the new law allows a long-

time resident of the same main home to claim the homebuyer credit if they purchase a new

 principal residence. To qualify, eligible taxpayers must show that they lived in their old

 homes for a five-consecutive-year period during the eight-year period ending on the

 purchase date of the new home. The IRS has stepped up compliance checks involving the

 homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid

 refund delays by attaching documentation covering the five-consecutive-year period: Form

 1098, Mortgage Interest Statement, or substitute mortgage interest statements, Property

 tax records or Homeowner’s insurance records. The IRS also reminded homebuyers that

 the new documentation requirements mean that taxpayers claiming the credit cannot file

 electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare

 their returns, but the returns must be printed out and sent to the IRS, along with all required

 documentation. Normally, it takes about four to eight weeks to get a refund claimed on a

 complete and accurate paper return where all required documents are attached. For those

 homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit

 will be issued toward the end of March. The IRS encourages taxpayers to use direct

 deposit to speed their refund. In addition, taxpayers can use Where's My Refund? on

 IRS.gov to track the status of their refund. More details on claiming the credit can be f

ound in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page

 on IRS.gov.   

FOR MORE INFORMATION GO TO WWW.IRS.GOV

 

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