Much has been made of the First-Time Homebuyer Credit, which, for, generally, homebuyers who have never owned a home or have not owned one in the past three years may claim a credit of ten percent of the purchase price up maximum credit amount of $ 8,000 ($ 4,000 for married person filing separate return). This is subject to phaseout when modified adjusted gross income exceeds $ 150,000 for married filing joint and $ 75,000 single taxpayer.

Less has been made (although it did make the news) of the fraud that has been uncovered by people claiming the credit not entitled to it. The IRS has responded over the past few weeks with increased auditing of the claim requests, including the use of Form 886-H-FTHBC, which asks for additional detail to be provided before the credit will be paid. This additional information includes copies of the final closing contract (usually the HUD-1 Settlement Statement), with all signatures, and certain proofs that the property is the residence of the taxpayer.

As a preparer, any First Time HB Credit forms that I file going forward will include all this information as attachment, to expedite the IRS review process. Meantime, if you get the letter from IRS requesting the additional information, please provide the information as quickly as possible and keep a copy of everything for your files.

And still less has been made of the reality that the IRS processing time from filing the amendment for the credit to getting the money is currently running 16-20 weeks; there is much anecdotal information on websites and blogs. Given the number of folks requesting this credit and those who abuse the system, this is not a surprising time-frame.

So don't spend the $ 8,000 assuming that the credit check will be in your mailbox before your next credit card bill is due.

Bob