Did you claim the homebuyer tax credit on your 2009 tax return? If so, depending on which version you got, you may have to pay it back:
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
At the beginning of the year, the fraud surrounding the homebuyer tax credit program attracted a lot of national attention; the numbers and circumstances connected to these schemes were quite astounding.
Scott Van Voorhis of the Boston Globe wrote that $139 million was wasted on “homes that had not yet been purchased or never were.”
Is the homebuyer tax credit a loan? Is it a credit? Is it a one-time check for a couple grand? Does it ever have to be repaid? These are all good questions, and questions we’re not sure everyone knows the answers to. As tax time is upon us, it’s more important than ever to understand such things.
In late January, we wrote a post on the homebuyer tax credit because many consumers were complaining about just how long it was taking to receive their check. The reason for the delay? Due to rampant fraud surrounding the program, the IRS decided to change the documentation it required in order for homebuyers to receive their “credit.”
(Hopefully the sarcasm in the title was duly noted.) Recent taxpayer frustrations are the reason why we’re delving back into the topic of the homebuyer tax credit. Homebuyers are frustrated over the delays they have been experiencing as they wait for their tax credit. One of reasons behind the delay is because Washington decided to work backwards.
Was getting a homebuyer tax credit too easy from the very beginning? Apparently so.
The Internal Revenue Service (IRS) has announced plans to expand a program that closely monitors how much income taxpayers report versus how much they pay on their mortgage. The IRS expects the expansion to take place by 2011:
After prompting from an IRS auditor, the agency will study whether it should make greater use of data on mortgage-interest payments provided to it by banks. The IRS currently uses such data to send notices to non-filers who it believes should have filed a return.
Several homebuyers have begun to ask their lenders whether or not they can use their $8,000 first-time home buyer tax credit as the down payment for their newly-purchased home. According to the Mortgage Grapevine, several borrowers have been told that this process is legit. We don’t know who is telling borrowers they can do this, but some mortgage professionals are warning borrowers that this practice may be considered tax fraud.
The following is from contributor lighthouse1 on the Mortgage Grapevine: Read the rest of this entry »
They’re all included in the $700 billion Troubled Assets Relief Program (TARP). These decorations have been tastefully hidden and largely unmentioned in the taxpayer-supported “Christmas tree bill” that passed last Friday.
Given Congress’ already low approval rating, we can only assume that disdain will grow when taxpayers learn more about the full extent of the bill. Leaving taxpayers to foot a bill that corrects our financial mess is one thing; yet greasing its way by stringing along tax breaks for such unrelated items as Puerto Rican rum producers and auto-race tracks is inexcusable. Unfortunately, this process of hanging decorations on a proposed bill is commonplace.
For months different versions of the housing rescue bill were kicked back and forth between lawmakers, debating and rejecting various stipulations that called for tax credits for first-time homebuyers, as well as financial relief for businesses and communities weakened by the housing crisis. So how did a mandate involving credit cards and the IRS wind up somewhere in between government-backed refinanced mortgages and counseling for lending agencies?
In an attempt to narrow the national tax gap, starting in 2011 lawmakers will require that every merchant who collects over $20,000 in payment-card transactions, or over 200 card transactions, be reported to the IRS:
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