On January 15, 2010, the IRS released a new Form 5405 that eligible homebuyers need to claim the first-time homebuyer credit this tax season and announced new documentation requirements to deter fraud related to the first-time homebuyer credit. The new form and instructions follow the major changes to the homebuyer credit made by the Worker, Homeownership, and Business Assistance Act of 2009.
A taxpayer who purchases a home after Nov. 6 must use this new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the previous version of Form 5405.
The processing of the tax returns containing Form 5405 will begin in mid-February, and, as long as all required documents are attached, it will take about four to eight weeks to get a refund claimed on a complete and accurate paper tax return.
Remember, the taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.