Tax Tips

In the June Tax Tips for IBOs, I talked about the $8,000 tax credit for first-time home buyers. There’s more you should know before attempting to claim this credit:

Beware: The IRS is sending out alarms about fraud schemes being perpetuated by some tax return preparers for this credit. One preparer is going to jail and 24 criminal investigations have been opened to date. These fraud schemes typically involve filing for the credit under false pretenses. Often, the taxpayer doesn’t know that the application for credit is improper.

• Per the IRS “We will vigorously pursue anyone who falsely tries to claim this or any other credit or deduction.”
• The IRS has sophisticated computer screening tools to quickly identify returns that may contain fraudulent

claims of the credit.

The Rules for Applying for the Credit
To keep you from being deceived into falsely applying for this credit, let’s restate the rules for qualifying for this credit. The rules for 2009 are:

• The purchase must close by or before December 1, 2009.
• The credit may not be claimed until after the taxpayer closes and purchases the home.
• The purchase must qualify as a first time homebuyer.

The definition of a first-time homebuyer for purposes of this credit is a taxpayer (and spouse if applicable) who must not have owned a primary residence in the past three years.

Be Careful When Selecting a Tax Preparer
In general you should be very careful when selecting someone to prepare your tax return. Overzealous, dishonest or uneducated return preparers can get you in big trouble, even though you had no intent to file an improper or fraudulent tax return.

Congress is on the verge of passing legislation to regulate unlicensed tax return preparers for this very reason. This legislation will likely require minimum annual education requirements, passing exams to demonstrate competence, and being registered so they can be monitored.

CPA’s and enrolled agents already are subject to all the above.

Do your tax preparer a favor and get your information to them as soon as possible, if you haven’t already. October 15^th is just around the corner!

Joe

Learn more about Joe DePetris, Jr., and IBO tax return preparation and tax issues at IBO Bookkeeping 101.

Find more Tax Tips for IBOs from Joe DePetris, Jr., CPA.

This article is provided as an educational resource for your guidance, and is strictly informational. It does not constitute legal, accounting, or other professional counsel. Nothing included herein implies a recommendation by the author, the IBOA International, or Amway Global, of any course or method of regulatory compliance. Readers and users who intend to take, or refrain from taking, any action based on information contained herein should first consult with their qualified tax advisor, preferably a C.P.A., or appropriate regulatory authorities.