Determine Your Tax Credit Amount: IRS Form 5405

Whether you apply the Extended Home Buyer Tax Credit on your 2009 return as a first-time buyer or as a current home owner, you’ll need to visit the IRS Web site and download Form 5405. Be aware that this form will likely be revised for 2009 and 2010, so be sure to visit the IRS web site and download the current form when it’s time to file.

This form has just six lines and takes only a minute to complete.

First-Time Buyers

If you’re a first-time buyer:

1. On the first line enter either $8,000 or 10 percent of the home purchase price, whichever is smaller.

Since the national median home price is around $175,200 (March 2009), in most cases the $8,000 will be the smaller of the two. In order for 10 percent of the home price to be smaller, the home purchase price would have to be $79,999 or less.
2. On the second line enter your adjusted gross income.

You will find your gross adjusted income on line 37 of Form 1040. The tax credit form actually requires you to note your modified adjusted gross income, but that affects few people, so most will just use their adjusted gross income.
3. If your adjusted gross income is more than $125,000 (individual) or your income is more than $225,000 (joint) you’ll have to complete some additional calculations to determine the credit amount for which you qualify.

Everyone else will simply enter the tax credit amount on Line 6.


Current Home Owners

If you are a home owner who has lived in the home sold for five (5) consecutive years out of the last eight (8), the process is the same, except:

1. On the first line enter either $6,500 or 10 percent of the home purchase price, whichever is smaller.


Watch IRS video: Recovery: New Homebuyer Credit 2009


Source: National Association of Realtors (Realtor.org)


Share the wealth: Bookmark and Share

Advertisements

2 responses to this post.

  1. […] the original post here: Determine Your Tax Credit Amount: IRS Form 5405 « The Backyard … By admin | category: home line of credit | tags: enter-the-tax, process, simply-enter, […]

    Reply

  2. Thank you so much, there aren’t enough posts on this… or at least i cant find them. I am turning into such a blog nut, I just cant get enough and this is such an important topic… i’ll be sure to write something about your site

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: