| Some people have come to me asking about two | | | | January 1, 2009 and April 30, 2010; however, if the |
| different topics which are current to the up coming | | | | contract is signed before April 30, 2010, it will still qualify |
| 15th deadline for taxes. Because of the time constraint | | | | only if the purchase is completed by June 30, 2010 |
| on these two issues, I have decided to write another | | | | - Are there income limits? |
| article between my regular Saturday ones to cover | | | | - Yes. Homes purchased between 1/1/09 and 11/6/09 |
| issues. | | | | the limits are $75,000 for single taxpayers and |
| First, the Home Buyer Tax Credit... There are 2 options: | | | | $150,000 for married filing jointly taxpayers |
| First-time Home Buyers | | | | - Homes purchased between 11/6/09 and 4/30/10 the |
| - How Much is the Credit? | | | | limits are $125,000 for single taxpayers and $225,000 |
| - 10% of the home's purchase price up to $8,000 | | | | for married filing jointly taxpayers |
| - Who is considered a First-Time Home Buyer? | | | | Second, Tax Extensions Yes the tax extension can |
| - Definition of a First-Time Home Buyer - Someone | | | | give you more time to get your tax return into the IRS. |
| who has not owned a "Principal" residence three years | | | | The date is pushed back to Oct 15th; HOWEVER, this |
| prior to the new purchase | | | | does NOT keep you from penalties and/or interest if |
| - Does it have to be repaid? | | | | you owe taxes to the IRS. |
| - Only is the home is sold or you stop using the home | | | | Due Date for ALL tax payments: April 15, 2010. This is |
| within three years from the initial purchase of the | | | | whether or not you file an extension |
| home | | | | Late Payment Penalty |
| - What is the max price of the house that applies to | | | | 0.50% per month of unpaid taxes up to 25% |
| this credit? | | | | The only way around the penalty is if you can show |
| - Your new home must be priced under $800,000 | | | | "reasonable" cause for not paying on time. This has to |
| - What is the time frame? | | | | be attached to the return when filed. |
| - The new home must be purchased between | | | | See the actual clip from the IRS on this situation below. |
| January 1, 2009 and April 30, 2010 | | | | Interest |
| - Are there income limits? | | | | You will owe interest on any tax not paid by the |
| - Yes. Homes purchased between 1/1/09 and 11/6/09 | | | | regular due date of your return. This is April 15, 2010, |
| the limits are $75,000 for single taxpayers and | | | | for a 2009 calendar year return even if you qualify for |
| $150,000 for married filing jointly taxpayers | | | | the 2-month extension because you were out of the |
| - Homes purchased between 11/6/09 and 4/30/10 the | | | | country. The interest runs until you pay the tax. Even if |
| limits are $125,000 for single taxpayers and $225,000 | | | | you had a good reason for not paying on time, you will |
| for married filing jointly taxpayers | | | | still owe interest. |
| Move-up or Repeat Home Buyers | | | | Late Payment Penalty |
| - Who is eligible? | | | | The late payment penalty is usually 1/2 of 1% of any |
| - You must have owned AND lived in your previous | | | | tax (other than estimated tax) not paid by the regular |
| home for five consecutive years out of the last eight | | | | due date. It is charged for each month or part of a |
| years | | | | month the tax is unpaid. The maximum penalty is 25%. |
| - Does it have to be repaid? | | | | The late payment penalty will not be charged if you |
| - Only is the home is sold or you stop using the home | | | | can show reasonable cause for not paying on time. |
| within three years from the initial purchase of the | | | | Attach a statement to your return fully explaining the |
| home | | | | reason. Do not attach the statement to Form 4868. |
| - How Much is the Credit? | | | | You are considered to have reasonable cause for the |
| - 10% of the home's purchase price up to $6,500 | | | | period covered by this automatic extension if at least |
| - What is the max price of the house that applies to | | | | 90% of your actual 2009 tax liability is paid before the |
| this credit? | | | | regular due date of your return through withholding, |
| - Your new home must be priced under $800,000 | | | | estimated tax payments, or payments made with |
| - What is the time frame? | | | | Form 4868. |
| - The new home must be purchased between | | | | |