Form 5405 RePayment of the $7500 for the FTHB Credit

[Eli]

A few days ago a client called me to tell me their refund was about $250 less than what I had told them it would be. They received a letter (544C) from the IRS telling them that the difference was due to the repayment of the FTHB. I went over the return & found that the $500 repayment was already included & calculated properly.

I called the IRS & the lady I spoke to said that the $250 was additional tax due to the $500 payment. That sure didn't make sense to me. I went over the return line by line with her & she still said that their computers were adding the additional $250 tax.

Well I couldn't get a good answer from her & I asked to speak to someone who could explain it. She transferred me to the Tax Law Dept, but we got disconnected. I didn't call back due to having a client waiting.

Today I get a call from another client who stated that he & his wife received $250 less on their refund than what I had told them. They also had the FTHB credit repayment form & the $500 was showing & calculated on their return.

Anyone else have this happen?

Eli

[kcjenkins]

I think the only thing you can do is keep on trying to get to a level where someone who understands is able to help you clear this up. The first level workers basically just answer the phones and give automated responses off a computer screen.

Anyone else getting these yet?

[Eli]

I think the only thing you can do is keep on trying to get to a level where someone who understands is able to help you clear this up. The first level workers basically just answer the phones and give automated responses off a computer screen.

Anyone else getting these yet?

Thanks, KC! 1 hr & 45 mins & counting. I'm hoping they will answer tonight lol

[kcjenkins]

Yeah, I hate it when that's the best advice I can give. But when it's their error, there is really no other answer.

[Cathy]

Eli, Although I haven't heard from my client whether or not he received a letter explaining why his refund was for $250 less also, I figured it had something to do with the loan repayment for the "loan" received for the homebuyers that year.

My client's return also included the $500 repayment for 2012! Please let us know what you find out and I will also get on my client's situation the first thing in the morning and will post what I'm told as well! The taxpayers who must pay the "loan" back have been treated like "red headed stepchildren"! The first payback year, all of their refunds were delayed as IRS had not set up their systems to receive the payments...now this!

Thanks!!!

Cathy

[Eli]

Eli, Although I haven't heard from my client whether or not he received a letter explaining why his refund was for $250 less also, I figured it had something to do with the loan repayment for the "loan" received for the homebuyers that year.

My client's return also included the $500 repayment for 2012! Please let us know what you find out and I will also get on my client's situation the first thing in the morning and will post what I'm told as well! The taxpayers who must pay the "loan" back have been treated like "red headed stepchildren"! The first payback year, all of their refunds were delayed as IRS had not set up their systems to receive the payments...now this!

Thanks!!!

Cathy

Cathy I waited on hold for 2 1/2 hours & finally gave up. I am going to try again early in the morning. Hopefully the wait wont be as long. I will definitely post the result.

Eli

[Eli]

I tried again early this morning & was disconnected due to the high volume of calls I guess I'll have to be persistent.

Eli

[ILLMAS]

A few days ago a client called me to tell me their refund was about $250 less than what I had told them it would be. They received a letter (544C) from the IRS telling them that the difference was due to the repayment of the FTHB. I went over the return & found that the $500 repayment was already included & calculated properly.

I called the IRS & the lady I spoke to said that the $250 was additional tax due to the $500 payment. That sure didn't make sense to me. I went over the return line by line with her & she still said that their computers were adding the additional $250 tax.

Well I couldn't get a good answer from her & I asked to speak to someone who could explain it. She transferred me to the Tax Law Dept, but we got disconnected. I didn't call back due to having a client waiting.

Today I get a call from another client who stated that he & his wife received $250 less on their refund than what I had told them. They also had the FTHB credit repayment form & the $500 was showing & calculated on their return.

Anyone else have this happen?

Eli

Good luck Eli, I had the same problem last year with a client, it's an IRS mistake and they want for you to write a letter explaining it's the IRS mistake etc...... PM if you wish I have a sample letter already.

Marco

[Eli]

Good luck Eli, I had the same problem last year with a client, it's an IRS mistake and they want for you to write a letter explaining it's the IRS mistake etc...... PM if you wish I have a sample letter already.

Marco

Thanks, Marco! I Appreciate this gesture & I will definitely do that.

Eli

[neilbrink]

The catch is that you should not fill out the Form 5405. If you submit the Form 5405, the IRS assumes you sold the house. There is a worksheet to complete for all those who have not sold their house.

[Kea]

New client had filed return through Turbo Tax and it rejected. I had the 2008 FTHB "loan" and converted the house to a rental in 2012. The rejection stated that the loan repayment amount on the return did not match their records.

When I eventually get all my questions answered, it will be interesting to see if it gets rejected again. He did give me corrected figures for repayment amounts. When I tried using the IRS website, it said they couldn't find it. Maybe I spelled the address wrong. I didn't try very hard.

[Eli]

The catch is that you should not fill out the Form 5405. If you submit the Form 5405, the IRS assumes you sold the house. There is a worksheet to complete for all those who have not sold their house.

But Part II on the 5405 is having to do with the repayment of the credit. Nothing in Part I or Part III is filled in.

Eli

[JMovichEA]

The IRS tool for checking this is for each spouse. I noticed the software printed 2 5405s. One joint with the $500, and then one for the spouse, but just a blank form. Is IRS adding another 250 for a spouse to the 500 on the joint 5405?

[Eli]

The IRS tool for checking this is for each spouse. I noticed the software printed 2 5405s. One joint with the $500, and then one for the spouse, but just a blank form. Is IRS adding another 250 for a spouse to the 500 on the joint 5405?

Only 1 form was printed on these particular returns.

Eli

[joanmcq]

Ah, if the house was bought jointly, you have to do two. One for each spouse at $250 each. That's so if they divorce, the payback can be traced to each SSN.

[Eli]

Ah, if the house was bought jointly, you have to do two. One for each spouse at $250 each. That's so if they divorce, the payback can be traced to each SSN.

Is that something new? I didn't do that in the previous 2 years.

Thanks!

Eli

[Gail in Virginia]

If this is a systemic problem for all FTHB with repayments, you might be able to get the Taxpayer Advocates office to look into it. Systemic problems are supposed to be part of their mandate.

[Eli]

If this is a systemic problem for all FTHB with repayments, you might be able to get the Taxpayer Advocates office to look into it. Systemic problems are supposed to be part of their mandate.

Not sure how widespread it is.

Eli

[dominoes]

I thought the extra page for the spouse would only be used if both the filer and spouse had received the credit individually before marriage and both had repayment obligations after.