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First-time homebuyer for those without any taxable income

Posted by Andrew Chan  July 4, 2009 12:20 AM

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I bought my home in January 2009 but do not have taxable income. How can I claim my credit?

The first-time homebuyer credit that was enacted as part of the Housing and Economic Recovery Act of 2008 does not have a minimum income limit. Therefore, those who qualify for the tax credit may file for it even if they do not have any taxable income. This tax credit is a refundable credit which means that the credit can lower your tax liability below zero and result in a refund if the credit exceeds your tax liability.

For example, if your tax liability before the credit is $5,000 dollars and the refundable tax credit is $8,000 dollars, your tax liability will be a negative $3,000 dollars ($5,000 - $8,000 = -$3,000). In your case, if you do not have any taxable income and your tax liability is zero, you should be eligible for a refund of the entire credit.

In order to claim the credit you will need to file a tax return and IRS Form 5405. Form 5405 (First Time Homebuyer Credit) should be filed with your 2008 or 2009 tax return depending on when you purchased the home. If you purchased your home in 2008, you should file for the credit on your 2008 tax return. If you purchased you home in 2009, you can file for the credit on your 2008 or 2009 tax return. If necessary, you can file an amended 2008 tax return to claim this credit.

For more information about this credit, visit the IRS’ web site at: http://www.irs.gov/newsroom/article/0,,id=204671,00.html

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