Refund Delays For First Time Home Buyer Tax Credit Claims

[clydewolf]

Claims for the First Time Home Buyer Tax Credit (FTHB) and Continuing Homebuyer Tax Credit are causing delays with the IRS. The IRS has been adding staff and resources to address this issue.

Here is the text of the IRS memo on this subject:

The IRS today [March 23, 2011] released information on processing issues that are impacting a small percentage of tax returns involving repayment of the First Time Homebuyer Credit (FTHB), primarily involving 2008 home purchases. While most of these returns are processing normally, the IRS recognizes the hardship caused by delayed refunds and it has assigned additional staff and resources to address the issues promptly.

1. Married Filing Joint taxpayers who received the FTHB credit on a 2008 purchase. The IRS projects that some of these taxpayers will receive their refunds as soon as April 5 and others the following week.

2. Taxpayers who received the FTHB credit and are now reporting the sale or disposition of their home. The IRS projects that taxpayers in this situation should receive their refunds by the end of April.

3. Taxpayers who received the FTHB credit and are attempting to pay back more than the amount required (typically $500). The IRS projects that taxpayers in this situation should receive their refunds by the end of April.

The time frames above assume there are no other issues impacting the taxpayer refund, including federally mandated offsets to refunds.

It is important to note that taxpayer returns claiming a home purchase in 2010 are not affected, and those returns are being processed as are the vast majority of other homebuyer returns. Additional information is available on IRS.gov.

Because the IRS is aware of the issue and working to resolve it, taxpayers do not need to contact the Service regarding this matter. The IRS apologizes for any inconvenience.

[4jacks]

Well, that's honestly not too bad. I honestly expected worse with the whole tax credit thing. If I just received $8k for buying a house, I wouldn't be too upset about a refund that was running a little late.

[TheWealthSquad]

The problem is those who are paying back a small portion of the credit (the $7,500 not the $8,000) but are due a nice refund are going to wait until the end of April.

Some of them have been filed since January. I will say this year has seen far more delays in refunds being processed than any year I have been doing this.

State delays are getting longer in some cases as well. If you normally get a state refund you may want to think about changing your withholdings and paying some next year rather than getting a refund.

The states aren't in as a bad a trouble as last year but next year could be tough as well.