Want to Get Audited? Apply for Homebuyer Credit

[Brian in Mesa]

Want to Get Audited? Apply for Homebuyer Credit
by Stephen Ohlemacher, Associated Press Writer
Thursday, April 15, 2010

WASHINGTON -- Here's a good way to get audited by the Internal Revenue Service this year: claim the new homebuyer tax credit.

About a fifth of all IRS examinations done by mail in the past six months were for people claiming the credit, National Taxpayer Advocate Nina E. Olson told a congressional committee Thursday -- the filing deadline for individual tax returns.

The audits mean big delays in getting refunds -- as much as five months -- just as Congress and the Obama administration hope that tax refunds will spur economic growth and the homebuyer tax credit will improve the housing market.

Full story:

http://finance.yahoo.com/taxes/arti...or-homebuyer-credit?mod=taxes-advice_strategy

 

[thirty-two]

crap!

 

[jw7]

That is a good article and sound tax advice.

Except for the fact IT IS POSTED ON APRIL 15th!

Way to help out people, Mr. Ohlemacher. Nice job.

 

[Brian in Mesa]

That is a good article and sound tax advice.

Except for the fact IT IS POSTED ON APRIL 15th!

Way to help out people, Mr. Ohlemacher. Nice job.

No doubt, Bob. I couldn't believe the timing.

 

[nathan]

Makes sense. I'm sure there are people that would try to claim it without actually buying a house.

 

[Mulli]

I applied for it. Already have my return. :Iwin: I bet some of the "audits" involved not sending in the right information to show you actually purchased the home.

 

[dreamcastrocks]

I applied for it. Already have my return. :Iwin: I bet some of the "audits" involved not sending in the right information to show you actually purchased the home.

Yep. Applied for it, already received my turn almost a month ago.

 

[Beaver]

Same here.

 

[ozzfloyd]

Doing my 2009 tax year supplemental as I just closed on my first house. If they audit me it'd be pretty fast work for them.

Always done my taxes online, easy form, always have taken the stadard deduction and never itemized (standard deduction was always more). Take 'em about five minutes!

 

[AzCards21]

Why in the heck this is even a tax credit amazes me. Do I get a retro tax credit for saving up a down payment and buying my first home years ago?

Not that I'm jumping on anyone taking advantage of it I would too but really, why is it an option?

 

[Cardinals.Ken]

Is this just post hoc ergo propter hoc?

It may just be a statistical anomaly.

 

[jw7]

Doing my 2009 tax year supplemental as I just closed on my first house. If they audit me it'd be pretty fast work for them.

Always done my taxes online, easy form, always have taken the stadard deduction and never itemized (standard deduction was always more). Take 'em about five minutes!

Congrats on your new house!

But you will not be taking the std deduction going forward as the mortgage interest deduction will push you into itemized land. Which is OK, you can deduct things like your auto-registration fees and charitable contributions and so forth, so save your receipts.

And being audited is not necessarily what you think it is. I've been "audited" twice. What happens is the IRS computer finds a discrepancy in your returns and sends you a nastygram saying you owe X in back taxes plus a big penalty.

The first time it happened to me I spent like 2 days photocopying documents and putting together a spreadsheet balancing the numbers and sent it in, and they waived the objection.

The second time, I just called up the IRS, talked to a customer service rep for about 2 minutes and told her why she was wrong. She waived the objection on the phone.

Weird.

 

[LVG]

Why in the heck this is even a tax credit amazes me. Do I get a retro tax credit for saving up a down payment and buying my first home years ago?

Not that I'm jumping on anyone taking advantage of it I would too but really, why is it an option?

I think, AZ, the point of the tax credit is to try to encourage home buying so that the excess inventory is bought back up. In the Vegas valley, everything I've heard is that in addition to the houses publicly listed / available for sale, the banks are sitting on an additional 25k-50k of houses that they don't want to put on the market just yet, or it would destroy the values of homes even further.

 

[conraddobler]

I think, AZ, the point of the tax credit is to try to encourage home buying so that the excess inventory is bought back up. In the Vegas valley, everything I've heard is that in addition to the houses publicly listed / available for sale, the banks are sitting on an additional 25k-50k of houses that they don't want to put on the market just yet, or it would destroy the values of homes even further.

It's exactly the same concept as providing 0 percent financing on auto loans, everyone buys a car, you pull forward demand, eventually you are right back where you started.

It's a gimmick, it's stupid and it causes people to make decision they otherwise wouldn't make.

I'm not bashing anyone for doing it either but it's like cheating at solitare, there is no freaking point to it.

What happens when the credit expires?

Then what?

A lot of people who may have been getting ready to buy, have already bought because of the credit, and there you sit, with less buyers now, or if you want to look at it logically no new buyers have been created, they have just been shifted around.

All you've done is shifted their demand forward, at the expense of the future, which is what our entire problem has been in everything.

One day the future becomes today and you're screwed.

instead of the highest possible outcome we have set countless systems onto the same destructive path of selling the future for today.

Today is always guaranteed to be less optimum than it could have been because part of it is always sold and the part that is sold is growing which is IMO shrinking our lifestyles across the board at an accelerating rate.

One final note.

If no one can buy a home because all the demand was sucked forward then when the credit expires the resultant dearth of demand will cause sellers to have to drastically lower their price to meet the new lower demand curve.

Those who bought on the credit could in theory be trapped into their homes because the values dump farther.

The whole thing will end up exactly where it was alwasy going anyhow at the cost of a lot of taxpayer money.

It's purely a political gimmick that wins votes using taxpayer money to accomplish it, ironically IMO at the taxpayers ultimate expense.

 

[CaptTurbo]

claimed it got my return.

 

[ozzfloyd]

For me the tax credit was just icing on the cake. 6 months ago buying a house wasn't even on my radar. I didn't think I could afford it, and maybe never would be able to. Anyway, my folks actually started me thinking, telling me about some real good buys. I told them that it's great that prices are so low but I can't afford the down payment. So they ponied up $25k for me. Got a new build, 1200 sq ft (small but I'm single) for right about $100k. Now my mortgage payment is about the same as my rent was. Really a no brainer. Then there's also the tax credit...I'll be able to pay off a credit card, squirrel away some $ in my savings, and take a nice little vacation.

 

[jw7]

For me the tax credit was just icing on the cake. 6 months ago buying a house wasn't even on my radar. I didn't think I could afford it, and maybe never would be able to. Anyway, my folks actually started me thinking, telling me about some real good buys. I told them that it's great that prices are so low but I can't afford the down payment. So they ponied up $25k for me. Got a new build, 1200 sq ft (small but I'm single) for right about $100k. Now my mortgage payment is about the same as my rent was. Really a no brainer. Then there's also the tax credit...I'll be able to pay off a credit card, squirrel away some $ in my savings, and take a nice little vacation.

So I think I may have to rescind my "itemized" comment before. If I understand you correctly, you are carrying a balance of 75K on the mortgage?

So that is about 4-4.5K in interest and I don't know Pima county tax rates, but I'm guessing that is going to be about $1200 or so per year.

The STD deduction for 2010 is going go be $5700, so you are really right at the borderline.

And your parents are nice! My folks are well-off, but they told me I was totally cut-off at age 21. LOL, glad they did. Do you plan to pay them back? That is so nice because not only did you make the down payment, you avoided PMI.

 

[Cardinals.Ken]

The STD deduction for 2010 is going go be $5700, so you are really right at the borderline.

There's a deduction for STD's?

****ing aye dude...how did I miss that?

 

[DWKB]

It's exactly the same concept as providing 0 percent financing on auto loans, everyone buys a car, you pull forward demand, eventually you are right back where you started.

It's a gimmick, it's stupid and it causes people to make decision they otherwise wouldn't make.

I'm not bashing anyone for doing it either but it's like cheating at solitare, there is no freaking point to it.

What happens when the credit expires?

Then what?

A lot of people who may have been getting ready to buy, have already bought because of the credit, and there you sit, with less buyers now, or if you want to look at it logically no new buyers have been created, they have just been shifted around.

All you've done is shifted their demand forward, at the expense of the future, which is what our entire problem has been in everything.

One day the future becomes today and you're screwed.

instead of the highest possible outcome we have set countless systems onto the same destructive path of selling the future for today.

Today is always guaranteed to be less optimum than it could have been because part of it is always sold and the part that is sold is growing which is IMO shrinking our lifestyles across the board at an accelerating rate.

One final note.

If no one can buy a home because all the demand was sucked forward then when the credit expires the resultant dearth of demand will cause sellers to have to drastically lower their price to meet the new lower demand curve.

Those who bought on the credit could in theory be trapped into their homes because the values dump farther.

The whole thing will end up exactly where it was alwasy going anyhow at the cost of a lot of taxpayer money.

It's purely a political gimmick that wins votes using taxpayer money to accomplish it, ironically IMO at the taxpayers ultimate expense.

New buyers are created by time 95% of the time. As one grows to an adult, they become a prospective home buyer. As one develops a family they become a prospective home buyer or they look to upgrade. As one retires they look for a second home, a new location, or a downgrade.

While the credit does do some shuffling per the tax payers dime, your post reads like an overstatement. You are correct in regards to it being like a 0% financing --which people never seem to complain about missing like they do government deals-- and it's one more example of government run like a business. Odd to me because some people think only people who have run businesses should run the country.

 

[conraddobler]

New buyers are created by time 95% of the time. As one grows to an adult, they become a prospective home buyer. As one develops a family they become a prospective home buyer or they look to upgrade. As one retires they look for a second home, a new location, or a downgrade.

While the credit does do some shuffling per the tax payers dime, your post reads like an overstatement. You are correct in regards to it being like a 0% financing --which people never seem to complain about missing like they do government deals-- and it's one more example of government run like a business. Odd to me because some people think only people who have run businesses should run the country.

Your post is an example IMO of egregious generalizations.

The home ownership rate peaked at over 70% and is now steadily declining in your key demographic, young people, household formation is going the wrong way.

http://www.danter.com/statistics/homeown.htm

If the graph norms out to just about 60% or less then that's a hurricane comming for housing, and all credit indications continue to point to a CAT5.

It dosen't sound like much, oh it's just a flesh wound, look at the dip during the depression and realize that percentage wise this one should be about twice as bad.

Just wait for the post incentive numbers, should be good for a cow or two to be had by people who watch those numbers.

You can't properly know what comming unless you know how much harder it is to get a home loan than say 3 years ago, so then if you simply do the math on the new pool of qualified buyers vs the old pool you can tell that it's not going to be pretty for a long time.

 

[DWKB]

Your post is an example IMO of egregious generalizations.

The home ownership rate peaked at over 70% and is now steadily declining in your key demographic, young people, household formation is going the wrong way.

http://www.danter.com/statistics/homeown.htm

If the graph norms out to just about 60% or less then that's a hurricane comming for housing, and all credit indications continue to point to a CAT5.

It dosen't sound like much, oh it's just a flesh wound, look at the dip during the depression and realize that percentage wise this one should be about twice as bad.

Just wait for the post incentive numbers, should be good for a cow or two to be had by people who watch those numbers.

You can't properly know what comming unless you know how much harder it is to get a home loan than say 3 years ago, so then if you simply do the math on the new pool of qualified buyers vs the old pool you can tell that it's not going to be pretty for a long time.

I'll fully admit to generalizing, however, the link you give supports that generalization, home ownership increases over time and age.

I'm confused though, are you saying a correction should or should not happen? It seems like you're saying a correction should happen and are projecting the opposite stance on me, which I don't take. The drop isn't just with young adults, it's with every demographic.

If you look at my home state, Arkansas, in 1996 home ownership was at 66%, even with the decline since 2001 the home ownership is still at 2.5% higher in 2009. I think the scale of time needs to be more specifically defined in order to discuss the trend, right?

My generalization is based on a rather long scale, if you're only focusing on the recent past, then I have no argument with you.