Many taxpayers will be surprised to learn that copies of documents must be included with their income tax returns in order to qualify for the federal New Homebuyers Credit. Consequently, those who claim the credit for 2009 will be ineligible for e-filing.
When claiming this credit, taxpayers should study the instructions for Form 5405 carefully. Those who claim the new $6,500 long-term resident credit will have to include copies of one of the following items for five consecutive years during the last eight-year period: 1) Form 1098 Mortgage Interest Statement (or substitute); 2) property tax statement; or 3) homeowner’s insurance statement. Many people will not have kept these records. If you don’t provide the documentation, the credit will be disallowed.
In addition, a copy of the property settlement statement (HUD-1) for the purchase of the residence for which the credit is being claimed, including signatures of the buyer and seller, is required to be included with the tax return.
IRS Circular 230 Disclosure:
As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this communication was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.