Unlikely Seeming Scenario

[erchess]

Potential Client is a nurse who moved to NC from Florida in 2009 after divorcing her husband who was a wealthy doctor. Several things about her case disturb me and I may call her up and tell her she can't do what she wants to do.

She has not found employment since her divorce and has lived on personal savings, the money she got from hubby pursuant to the divorce, and money from her trust that was set up by her parents who are still alive and take care of the trust's taxes without involving me or her. Now so far I don't have any problems. But she on the one hand refers to what she got from her husband as alimony and on the other hand insists that the divorce decree says it is not taxable. It did come in a lump sum. Then again I am wondering how the proceeds from the trust can be non taxable but maybe that is right. (I read in TTB that property settlements and her share of income are not taxable so maybe that is what she has. Can anyone tell me if income from a trust set up by one's parents can legitimately be non taxable?)

Now here's the kicker. She bought a home in October of 09 and she wants the FTHB credit and she thinks it's refundable. Is it? If it's not and the rest of her thinking is right then she has no need to file. Also she says that her name was never on the deed to the home where she and hubby lived. Does that sound believable and does it even matter?

In any event I have another question. Where can I find instructions on mailing in a return that claims the FTHB Credit? I know that the paperwork from the sale goes in but is it at the back of an otherwise normal return? Also exactly what paperwork goes in? Everything?

[dyne]

Yes, the FTHB credit is refundable.

Enter the following in Google to find where to mail federal income tax returns:

http://www.irs.gov/file/content/0,,id=105690,00.html

For a list of the attachments required to be attached to the BACK of the federal return,
access:http://www.irs.gov/pub/irs-pdf/f886hfth.pdf

The list of attachments they want seems to keep changing. My philosophy is
to attach EVERYTHING imaginable which might pertain to the purchase.

[BP.]

My philosophy is to attach EVERYTHING imaginable which might pertain to the purchase.

Agree, and a reminder to write the client's SSN on each page of proof documents.

[spanel]

But, she will not qualify for FTHB if when she lived with her Husband, they lived in a house that He owned.

Makes no difference that only one of thier names are on the house/deed.

Chris

[dyne]

I agree with Spanel that she will NOT qualify for the FTHB credit.
Go to Google and enter: first time home buyer credit.
Look for a website similar to: www.irs.gov/newroom/article/0,,id=18793500.html

It states that marriage imputes ownership of a previous home upon the
other spouse.
She would not qualify for the long-time resident version of the credit since
her home was not purchased on or After Nov 7, 2009.

[luke]

SO Then

she should be able to qualify for "long time" FTHB credit (if they lived in fome 5 yrs etc..)?

[Dusty2004]

erchess

Did she also own the home with her husband or just her husband?

Dusty

[spanel]

she should be able to qualify for "long time" FTHB credit (if they lived in fome 5 yrs etc..)?

Noperz.

"She bought a home in October of 09"

That credit didnt start until 11/06/09.

Out of luck both ways Im afraid.

Chris

[taxcraft]

She for real?

She sounds like someone tailoring her answers to get you to give her the max refund. I would investigate and push for some more proof.

[erchess]

Difference of Opinion

She lived in a house her husband owned. I'm hearing a difference of opinion as to whether she is saved by the fact that her name was not on the deed Anyone have a cite? Does the fact that the home was in Florida instead of a community property state come into play. She and hubby filed jointly I think during the marriage. BTW the comp with my TTB CD installed is in the shop so that's why I have not read there.

[joanmcq]

She is SOL on the FTHB due to living in a house owned by her husband while they were married. remember, they are auditing 100% of these and mortgage interest on a joint return will disqualify her.

She might qualify on the LTHB. For that one, she needs proof of ownership for the last 5 years & proof of residence. property tax, utility bills with name & address & copies of joint returns w/ex should do it.

[luke]

nope

see spanel earlier reply - she missed the DATE for the long time credit.....

[JohnH]

Just print out this thread and give it to her. Maybe there will be enough info in it to help her figure out what to say to the next person she takes it to...

[erchess]

Thank You for all responses

I find I didn't write down the date when she told me she bought the house. The reason may be that it will be on the paperwork as will be all the other info I am going to need. The fact that my bs detector is going off is actually irrelevant to the handling of this return since the IRS is checking each one so carefully and requiring documentation of everything. I actually don't think she can lie her way into this credit if she's not entitled.

[erchess]

Update

She says she bought the home in late November and she says she can prove she and ex owned a primary residence for five years. She's disappointed not to be getting as much as she thought she was going to get and as the real estate agent told her she could get but she believes me and still wants to see me. I will post again if anything changes or if anyone posts questions. At this point I believe her on the date of purchase because I wrote none down when I first talked to her and because I have pointed out that what counts is the date on her paperwork.