Repaying Homebuyers Credit

Today TaxMama hears from Paul in the TaxQuips Forum with this question. “How do I start paying back the $7,500 homeowner credit from 2008? We know we’re supposed to pay it back in 15 installments of $500 each year; but we can’t find a line to enter it on the 1040 form for 2009.” http://taxmama.wpengine.com/forum/taxquips/how-do-i-start-paying-back-the-7500-homeowner-credit/

Well Paul,

There’s a good reason you can’t find a place on the 2009 Form 1040 to enter the $500 payback.

As Mark Taylor explains, this tax-free loan starts getting paid back in 2010 – and he  provides a link to an IRS article that explains this. http://www.irs.gov/newsroom/article/0,,id=186831,00.html

Since you know you’re going to owe this extra $500 on your 2010 tax return, IRS recommends that you increase your withholding this year to absorb the additional tax.

Sounds like a good idea.

And remember, you can find answers to all kinds of questions about repaying the 2008 first time homebuyers credit and other tax issues, free. Where? Where else? At www.TaxMama.com.

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