Any tax guys here?

cbzdel · Mar 6, 2010

I have a tax question. I have my taxes filled out and I owe $120, great I could send it in and be done with it BUT I am in closing on a house which I can claim on my 2009 taxes for the $8000 credit. Long story shot I wont completely closed until the end of April because I am in a city stabilization program which is paying my down payment because I am getting a foreclosed property.

So I am going to file an extension so I can get the home buyer tax credit now. But when reading the paperwork for filing for an extension it says if you owe money you must pay it. Do I owe money or dont I? I currently do but I wont when all is said and done. I could pay it now but I would rather not loan the government $120 for 2-3 months just just get it right back, I will make a few cents off it in my savings account haha!

ZachS · Mar 6, 2010

cbzdel said:
I have a tax question. I have my taxes filled out and I owe $120, great I could send it in and be done with it BUT I am in closing on a house which I can claim on my 2009 taxes for the $8000 credit. Long story shot I wont completely closed until the end of April because I am in a city stabilization program which is paying my down payment because I am getting a foreclosed property.

So I am going to file an extension so I can get the home buyer tax credit now. But when reading the paperwork for filing for an extension it says if you owe money you must pay it. Do I owe money or dont I? I currently do but I wont when all is said and done. I could pay it now but I would rather not loan the government $120 for 2-3 months just just get it right back, I will make a few cents off it in my savings account haha!

You definitely don't need to pay with your extension - you won't have any tax liability.

The reason the form is worded that way is to make sure that people who owe money don't think they're going to get extra time to pay. Even those that owe money and file the extension without payment don't face anything worse than a "Failure to Pay Penalty" of ~5%/month up to a maximum of 25% of the amount owed.

If you need any further reassurance, PM me.

goosehunter · Mar 7, 2010

if you file a extension you need to pay so you dont get p&i but for you on $120 is not much like $6 penalty and may be $1 interest and thats my .02. O yeah i also work for the state at the department of revenue and all i do is taxes so if you need more help send me a pm

ZachS · Mar 7, 2010

goosehunter said:
if you file a extension you need to pay so you dont get p&i but for you on $120 is not much like $6 penalty and may be $1 interest and thats my .02. O yeah i also work for the state at the department of revenue and all i do is taxes so if you need more help send me a pm

I'm only speaking for the IRS, and I have similar experience with that organization. The DOR may do things differently - but I'm pretty sure you don't charge p&i to a taxpayer who files a late return with zero tax liability.

rayd8 · Mar 7, 2010

No expert, but I think you can file an amended return after your home closes.

longcolt · Mar 7, 2010

It the credit applies to the tax return that you are filing you have no tax liability and do not have to pay if you file your extension.

If the credit applies to the 2010 tax year then you do owe the $120 payment.

It really all depends on the timing of the credit and whether or not the credit can be applied to last years tax return due April 15th.

cbzdel · Mar 7, 2010

if you buy a home before April 31st 2010 or are under a contract before April 31st but close before June 30th you can clam this on your 2009 taxes.

Yes I could file now and amend them later but I would rather do it all at once to just speed up the process. I heard it you amend them it takes quite a while for them to figure it out. Rather than me filing for an extension then later e-filing.

longcolt · Mar 7, 2010

cbzdel said:
if you buy a home before April 31st 2010 or are under a contract before April 31st but close before June 30th you can clam this on your 2009 taxes.

Yes I could file now and amend them later but I would rather do it all at once to just speed up the process. I heard it you amend them it takes quite a while for them to figure it out. Rather than me filing for an extension then later e-filing.

You answered your own question! Good answer, I would file the extension with the credit calculated in the tax, since you are entitled to the credit. So your extension shows zero tax liablity.

Once that extension runs out then file the second extension and you will be good to go. I have done this many times in the past for various reasons. The second extension will take you up to the closing date.

If for some reason the closing does not take place then you file your return and pay the 120. Let them decide if they want to come back on your for the small penalty and interest. They will bill you for it if they want to mess with nickels and dimes.

longcolt · Mar 7, 2010

You have nothing to fear from the IRS if you are honest and attempting to file correctly. If you make a mistake, you just correct it with an amended return at a later time. I have even added issues to the following year return with a letter of explanation and they were fine with that.

They only jump down your throat when large money is involved or if they believe you are not filing in accordance with the data they receive from W-2s, 1099 and other sources. Mistakes on the return will get their attention also, but they are good about accepting explanations and corrections.