Payback Time

[Snaggletooth]

2010 begins the payback period for the first round of FTHB credits. The "first round" being the $7500 credit that had to be paid back over 15 years @$500 per year.

Does anyone know the logistics of how this will be accomplished on the tax return? Will there be a line item in "Other Taxes"? What about reduction of "Refundable Credits" such that it may not even be a guaranteed thing that they have to pay back?? Will the $500 be buried somewhere else?

[David1980]

There will be a page 2 on the 5405 for the payback. The page 2 will be efilable (page 1, used for claiming the credit, will continue to be paper file only.)

It should carry over to the "other taxes" section on the 1040.

At the moment it goes to line 59 on the 1040 draft for 2010.

http://www.irs.gov/pub/irs-dft/f1040--dft.pdf

The draft 5405 isn't out yet.

[Rlmea]

Payback Time

I wonder how easy this will be to miss.... eg: new clients not providing copy of 2008 return, as there was nothing related to this as even existing on 2009 returns. Not only are we going to have to refer to 2009 returns when preparing our existing clients as usual, we will also have to refer to 2008 in many cases. I believe many clients will "forget" they even took advantage of this credit.

[erchess]

Repayment Forgiven

Back in 2008 I felt sure the repayment would be forgiven. It seems like I was mistaken so I'm glad I didn't share that opinion with any clients. It remains to be seen how much effort the government will put into enforcement on this issue.

[JohnH]

I only prepared one because I didn't like the idea of being involved with them - too much potential hassle if a client fails to repay and tries to use "blame the preparer" to muddy the water when they're caught.

Sure enough, that client didn't return this year. Could be a host of reasons and I'm not assuming they left for some nefarious motive. However, I do feel compelled to send them a reminder that they need to lobby their congressperson to try and get the repayment repealed or else they have to start repaying next year. Not that I care about repayment one way or the other because it was a good deal anyhow, but I just want to be sure they can't come back a few years from now claiming I didn't tell them.

[DaveO]

I only had 1 return that I claimed it on, and they too, did not return.

[ChEAr$]

I wonder how easy this will be to miss.... eg: new clients not providing copy of 2008 return, as there was nothing related to this as even existing on 2009 returns. Not only are we going to have to refer to 2009 returns when preparing our existing clients as usual, we will also have to refer to 2008 in many cases. I believe many clients will "forget" they even took advantage of this credit.

Naw, clients will become ex clients and not mention the payback to new preparer.

[Burke]

I only had 1 return that I claimed it on, and they too, did not return.

Same here.

[WhiteOleander]

I wonder if the IRS will have a reject code for returns that should have the repayment and don't? Somewhat like a debt indicator except the IRS computer won't allow e-file w/o the form 5405 and 500.00 repayment.

[joanmcq]

i'm sure it will flag and create a CP notice if nothing else.

[David1980]

I wonder if the IRS will have a reject code for returns that should have the repayment and don't? Somewhat like a debt indicator except the IRS computer won't allow e-file w/o the form 5405 and 500.00 repayment.

I think I heard that it will be similar to Schedule M. Reject if it doesn't match, with some sort of website we can use to check to see if they have a repayment. That might have been something else though.

(Not like Schedule M went very smooth either, so hopefully it's not like Schedule M in that regard.)

[S T]

Payback

I have two clients that are on the "payback" for the early First Time Homebuyers Credit.
Software in 2008 issued a statement and schedule which I sent to them,
A reminder note with 2009
So if I prepare the returns, it appears to be handled by my software updates
If the taxpayer's go elsewhere for preparation of their 2010 tax return, I feel I have already done my due diligence and I would suspect that their return would either be rejected if efiled, or efile will be accepted, and their refund will be decreased by the amount of payback due in 2010.
David1980 might be right, there might be an additional form to complete

Sandy

[MAJ]

Reject & Webiste..

I think I heard that it will be similar to Schedule M. Reject if it doesn't match, with some sort of website we can use to check to see if they have a repayment. That might have been something else though.

(Not like Schedule M went very smooth either, so hopefully it's not like Schedule M in that regard.)

My feelings exactly.. More for us to jingle around and play with... Wonderful...

Curious.. This brings up another questions -- So - The schedule M.
It pretty much filled itself out -- What does / did we charge for this?

Also curious about the EIC charge -- How much extra are people charging. I've increased mine 2009-2010 due to the added pressures / due dilegence, etc.

[Mo Sheets]

Repayment of First Time Homebuyer Credit - 2008

According to the information provided at the IRS Tax Forum in Atlanta, the IRS personnel indicated they were going to send reminder postcards this fall to those folks who would need to start paying back their First Time Homebuyer Credit.

Funny....you would think they would send it in January when the taxpayer receives their other tax forms....One forum attendee suggested they have a site on the www.irs.gov that would allow us to check to see if someone received the credit based upon their social security number....the IRS personnel said they would "look into it".

[Lion]

One

I have only one that took the "loan" and due to her income, it was partially phased out. I'm worried if they treat the new page 2 for Form 5405 like Schedule M -- expecting an exact match -- since her "loan" was something like $2,153 rounded up from $2,154.61. Will we need to match to the penny or just to the dollar? I see IRS letters where they truncate the cents instead of rounding up to the next whole dollar.