IRS Releases New Forms, Instructions for claiming Tax Credit

The IRS has released IR-2010-6, which provides a revised Form 5405 to reflect the changes to the tax credit made in the extension and expansion legislation enacted in November 2009. The release reminds taxpayers that those claiming the credit cannot use the IRS E-File automatic system but must file their returns manually. The revised form includes a section for repeat buyers who are eligible to claim the $6,500 tax credit. The HUD-1 or evidence of the transaction must be filed with all returns claiming the credit (both the $8,000 and $6,500 credits). Individuals who claim the repeat-buyer credit must also provide evidence that they have owned and used the prior residence for five consecutive years. Property tax or home-owners insurance records are sufficient for this purpose, the form indicates.

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