First Time Homebuyer - Proof?

[zeros]

I know there has been a lot of questions regarding the FTHC and probably could find my answer somewhere already written. I got my first request for this credit. Is there any proof needed and/or sent in with the 1040X?

[MLINDER42]

First Time Home Buyer

There is no proof needed just fill out 5405 with 1040x and mail it.Most have already closed on purchase.

[JG EA]

One more thing I do. Warn about what will happen if they don't keep the home for the time limit required. I give the client that part of the form instructions.

[Lion]

Posts

I've seen some posts where tax preparers said their clients later received letters asking for various items of proof: closing papers, explanation of why property tax in former years was not their principal residence, etc. So, do remind client to keep all their paperwork (we'd do that anyway for a capital asset).

[Jiggers]

One additional item of proof

I would be sure that the address that they are now using is NOT the same address that was on their 2008 return, or any return before that!

[JohnH]

Personally I woudn't prepare one for a new client, but if I were going to do so, I'd also want to see the past 3 year's returns to be sure they hadn't claimed property tax or home mortgage interest deductions. That would be in addition to the HUD-1.

[BOB W]

A client of mine just got his refund, minus the $8,000. "Where's my Refund" says, ""you will receive a notice for addition information need to process your complete refund. When to get your notice you have 30 days to respond or the return will be closed for the credit.""

[S T]

Proof of Homewownership

Seems like there were no guidelines to submit with an original filed return any proof of homeownership and filing the form 5405. However there have been subsequent posts on this board on IRS requesting additional proof after the return is filed. Delaying the refund of the credit.

I wonder, if you are filing a 1040X for the claiming the credit, whether or not to also attach the proof that IRS might ask for. Which I guess would be the escrow statement, HUD statement, maybe a copy of the loan documents, a copy of the property tax bill (if you have access to, and the accounts have been updated to the taxpayer's name), copy of a utility bill with the taxpayer name and property address, etc.

The credit is a "PITA", but at least for now the IRS seems to being exercising their due diligence to determine a legitimate credit, as I have to believe there is probably a lot of fraud involved to obtain this credit.

Whether you submit with the tax return, a 1040X or not, seems like sooner or later, you will need those documents to substantiate the credit either for 2008 or 2009.

I haven't heard from either of my clients that I filed for the credit in 2008 with the tax return, I will email them to see if they have received their refunds including the credit or if they have received any additional inquiries from IRS, and then will post back.

Keep us posted,

Sandy

[JohnH]

I did have one client early in the year who qualified for the credit.
I sent the client to HRB.

They filed the return with no supporting documentation and client received the refund in about 3 weeks. Client hasn't received any follow-up inquiries on it.

[MLINDER42]

First Time Home Buyer

I have done 5 1040X 's so far 3 have received refund 2 are pending.None have been asked for more paper work.During tax season did about 10 of the 7500 all received total refund in allotted time.The checks they received were very large a couple I had to print 2 checks.None have been asked for proof so far.

[Davc]

Personally I woudn't prepare one for a new client, but if I were going to do so, I'd also want to see the past 3 year's returns to be sure they hadn't claimed property tax or home mortgage interest deductions. That would be in addition to the HUD-1.

If they'd claimed those items it still wouldn't be proof that they'd owned a principle residence. They might have a vacation home.

[JohnH]

True, but it would be a valid reason to dig deeper, since that deduction on a prior year's return would be likely to trigger an inquiry from IRS. May as well have the answer in hand while the issue is fresh on your mind.

[erchess]

JohnH

Can you explain why you send people away when you do not know for a fact that they are trying to fool the government?

[JohnH]

I just don't want to get involved with the FTHB credit for a number of reasons. Mainly I don't care to have a time bomb sitting in my files (the $7,500 credit from 2008) - it just isn't worth the hassle to me. My attitude has nothing to do with the client or their honesty - it has everything to do with what I am not willing to deal with in the long run.

I think they should certainly take the credit if they're entitled to it, and I've encouraged anyone who contacted me about it to go to HRB and get their return done. The one exception is a military officer who is also a long-time client. I prepared his return claiming the $7500 credit because I'll make any exception to help out one of our genuine heroes.

My responses on this thread dealt with "what ifs". In thinking through what I would do in the unlikely event that I later cave in and prepare any other returns claiming the credit, I have concluded that 'll have it documented to the max in my files. If I can't get all the documentation I require, then I still won't do it.

BTW, I wouldn't send any of the documentation in with the 1040 or 1040X because that runs counter to another of my basic practices, but I'll insist that I have every bit of it on hand before preparing the return.

[Black Bart]

Anyway, you've got one supporter.

I just don't want to get involved with the FTHB credit for a number of reasons. Mainly I don't care to have a time bomb sitting in my files (the $7,500 credit from 2008) - it just isn't worth the hassle to me. My attitude has nothing to do with the client or their honesty - it has everything to do with what I am not willing to deal with in the long run.

I've done one so far and have another on tap to do (long-time clients). But I agree and if ah had mah druthers -- ah'druther not.

These new ones are not as worrisome as the $7,500s (praise Allah I didn't do any). Imagine the plight of tax preparers who tipped off clients that interest-free loans were available if they'd buy by 12-31-08. Say one who was house-hunting but in no particular hurry rushed to buy on your advice; then heard about the free $8K. Given human nature, many will feel that their preparer was not knowledgeable/was not up-to-date/was incompetent. Now they've got the next 15 years to make payments and spread the word about who gave 'em that stinkin' tax advice.

I don't trust government not to pull another switch like the last time (maybe they'll up the ante to $16K for people buying from August-December).