Homebuyer Tax Credit Means No e-file

Buyers who purchased a home after November 6th were unable to claim their tax refund for first time homebuyers because the Internal Revenue Service had yet to release a new form and instructions for doing so. However, the new form is available from the IRS website now, and you can file for your $8,000 credit now.

The bad news is, you cannot e-file your taxes if you want the cash, and you can expect long delays.

Previously, first-time buyers were able to immediately file for the tax credit after Congress approved it last February as part of the stimulus program. All they had to do was file an amendment to their 2008 tax returns (the ones they filed last April) and claim the promised refund of 10% of the purchase price, up to $8,000.

But on Nov. 6 the rules changed. That’s when Congress extended — and expanded — the tax credit, which was originally scheduled to expire on Nov. 30.

Now, the deadline is April 30, by when all contracts must be signed. (Closings must happen by June 30.) Plus, existing homeowners looking to trade up (or down) can qualify for a $6,500 refund.

And these new buyers can no longer file electronically. They have to mail in paper forms, including the new 5405, whether they are amending their 2008 taxes or claiming it on the 2009 taxes that are being filed this spring.

Buyers must now file documentation with their taxes — including proof of residency, a signed mortgage statement and drivers license — which the e-file system is not equipped to handle.

Also of Interest Do You Cheat on Your Taxes?

All this is due to the people who were scamming the system when no proof was required. The IRS points out that taxpayers can still use the electronic forms available on its Web site or consumer sites, they just have to print them out, attach the proof and mail everything in, and expect delays of up to four months before getting your refund.