Taxpayers Unable to Claim Home Buyer Tax Credit, New Form Released Today

Those who anticipate on using their home buyer tax credit any time soon had better rethink their plans. Home buyers eligible for the $8,000 or $6,500 tax credit will find it tougher going than those who claimed it on their 2008 tax returns. Anyone who planned on using it to make their first few mortgage payments will have to come up with other funds fast, or risk damaging their credit right out of the gate. And those who borrowed against it with a refund anticipation or other loan will be paying a lot more for the money than they expected. Refunds are expected to take a minimum of four months.

Buyers who closed on thei home purchases after Nov. 6 were unable to claim the refund because the Internal Revenue Service had yet to release a new form and instructions. But today, the IRS finally posted the new form 5405.

You won't be able to file electronically, either. You will have to mail in paper forms, including the new 5405, even if you amend your 2008 taxes instead of claiming it on your 2009 taxes���� this spring. This is because the IRS requires a lot more documentation this time around, thanks to the huge number of fraudulent claims filed last year--people claimed the credit but never got around to buying a home, or buyers who weren;t first-timers claimed it when they shouldn't have.

This time around, you'll have to provide the following paper documents: a signed copy of the settlement statement ( HUD-1), plus a signed mortgage statement with the new address and a copy of either your drivers license, bank statement, or pay stub showing the new address. In addition, taxpayers claiming the $6,500 credit will have to prove 5 years' continuing home ownership before buying the new home.���� Be sure that you have all required paperwork when you file or your refund will be delayed even further.

Those who have taken refund anticipation loans to fund their down payments can expect to pay several hundred dollars in additional interest before they can repay those loans. If your refund includes funds in addition to the tax credit, you can get money that in a few days by filing electronically and providing your bank account information. Then file an amended return by mail to claim your credit.