Filing an Amended Tax Return to Receive the First Time Homebuyers Tax Credit

Today, there are many incentives to purchase a new home, namely historically low interest rates and a surplus in empty homes, which has reduced the overall cost of a new home. Together, these incentives can make it much more affordable to own a new home and it is possible to end up paying much less than you would in rent. The government is also currently offering an incentive for first time home buyers in the form of a tax credit of up to $8,000 towards the purchase price of the home. While this tax credit can be applied to either your 2008 or 2009 tax return, it is probably in your best interest to file an amended 2008 tax return, so the first time home buyers credit can be received sooner rather than later.

What is the First Time Homebuyers Tax Credit

The 2009 First Time Home Buyers Tax Credit is part of the American Recovery and Reinvestment Act, which is designed to help stimulate the economy. President Obama signed this bill into law in February and it includes a number of tax incentives for both consumers and corporations. All told, the American Recovery and Reinvestment Act includes $288 Billion in tax relief, which represents about a third of the American Recovery and Reinvestment Act’s budget.

Of the $288 Billion in tax relief, $6.6 Billion has been set aside for first time home buyers. There are several requirements to receive the first time home buyers credit, including that the individual has not owned a home in the last three years and that their income is less than $75,000. For those that meet the requirements up to $8,000 is offered in the form of a tax credit that does not need to be repaid.

How to File an Amended Tax Reutrn

Obama’s First Time Homebuyers tax credit can be claimed on either ones 2008 or 2009 tax return, but rather than waiting, it is generally in your best interest to file an amended tax return, so that the funds can be received right away. Filing an amended tax return is very easy and it is only necessary to resubmit a 1040X IRS Form and include a form 5405, which is required as part of the First Time Home Buyers Tax Credit. After the amended tax return has been submitted and received by the IRS, it usually takes between 8 and 12 weeks to process.

The Advantages of Filing an Amended Tax Return

By filing an amended tax return, it is possible to get your stimulus check much quicker than if you were to wait until 2009. This means you get the money right away and can reinvest it in your home, simultaneously increasing equity and reducing mortgage rates. It can also be spent on home improvements or to help with bills.

Those that decide to file for the 2009 First Time Homebuyers tax credit return on their 2009 taxes will have to wait much longer to receive their stimulus check. It also could mean that the budget could be expended, which has already happened with the Cash for Clunkers incentive program. However, in order for the first time Homebuyers tax credit’s budget to be expended, 825,000 people would have to submit an application.

Another Option: Changing the Number of Deductions

While it is possible to file an amended tax return to receive your funds right away, it is also possible to change your number of deductions, so that you pay less, or even nothing, towards your federal taxes in your paychecks. At the end of the year, the First Time Home Buyers Tax Credit will be applied to what you owe to the IRS and the difference will be refunded.