The IRS has decided that for the 2010 filing season (2009 Form 1040), it will not accept tax returns for e-filing that contain Form 5405. Form 5404 is required to claim any of the the Homebuyer Tax Credits, including the $8,000 credit for new homebuyers and the $6,500 credit for prior homeowners.

There are 2 ways to claim the credits for 2009. The first is that you can paper file your original tax return. As of January, 2010, the IRS is estimating that it will take 4 to 5 months to process your tax return.

The other is to e-file your original tax return and get your refund without the homebuyer credit. This will allow you to get some benefit in as quickly as 10 to 17 days. Once you receive the first refund, you can submit an amended (corrected) tax return on Form 1040-X along with your Form 5405. The balance of your refund will then take 4-6 months to process.

ATTACHMENTS REQUIRED

The reason why the IRS requires so much time to process your claim is that there was a very high incidence of fraud in 2009 with false claims being filed. The IRS has implemented new procedures which require you to attach the following items with your Form 5405:

     1. A copy of your purchase contract including all signature pages and the pages showing the property address, purchase price, and effective date of the contract.

     2. A copy of the HUD-1 Settlement Statement (you should have received this at the closing).

     2b. If you did not get a HUD-1 statement because you bought a mobile home, the purchase contract showing all relevant details is all that is needed.

     2c. If you are claiming a newly constructed home, attach a certificate of occupancy showing your name, the property address, and the certificate date.

IF YOU DO NOT ATTACH PROOF OF PURCHASE AS DESCRIBED ABOVE, THE IRS WILL DENY YOUR CLAIM. If this happens, we strongly advise you to bring your documents to us for assistance.