Multiple reasons to amend taxes – what's the best order of operations?
March 6, 2016 9:52 AM Subscribe
I have a small mess on my hands with IRS Form 5405, and repaying the 2008 First Time Homebuyer Tax Credit. Looks like amending is going to be needed. In what order, and how, do I need to amend all of these returns? Bonus: also need to amend my 2015 taxes, anyway.
You are not my accountant, understood.
My wife and I used an accountant through the 2012 tax year. We bought our first house back in 2008 and used the First Time Homebuyer Tax Credit, which needed to be paid back every year. However, we moved out of our house (i.e., no longer primary residence) in 2011 and completed a short sale, selling it for a loss, in 2013. Thus, according to my understanding of the Tax Credit, we no longer need to pay the credit back once the house is sold for a loss – we also did not buy a new home. Check me on this.
I switched over to TurboTax in tax year 2013 (and used it for 14 and 15), and attempted to file a Form 5405 with the sale date as the date of disposal of the home... and it errored out. It would only allow a date for the current tax year, not the calendar year.
In tax year 2012, we did have a separate schedule D (showing a loss) for the house, but no 5405. We did not pay back the credit on our 2012 tax year taxes.
As a bonus, I completed and submitted my 2015 taxes... and *then* received one more W-2, so I need to amend the 2015 return in any case (i.e., it doesn't account for the W-2 *and* it has repayment of the credit).
So my questions:
1. Is my understanding of the repayment credit correct? Do we no longer need to repay it as of calendar year 2013 (when it was sold) or would it be calendar year 2011 (when we moved out, leaving the home vacant)?
2. If so, how do I amend all of the returns? Do I need to do 2012, 2013, 2014, and 2015?
3. Since there are apparent repercussions for each year from tax year 2013 on, do I need to submit them sequentially or all at once?
4. Should I just deal with an accountant? Is this super complex?
Feel free to pepper me with follow-ups if needed. Thank you!
You are not my accountant, understood.
My wife and I used an accountant through the 2012 tax year. We bought our first house back in 2008 and used the First Time Homebuyer Tax Credit, which needed to be paid back every year. However, we moved out of our house (i.e., no longer primary residence) in 2011 and completed a short sale, selling it for a loss, in 2013. Thus, according to my understanding of the Tax Credit, we no longer need to pay the credit back once the house is sold for a loss – we also did not buy a new home. Check me on this.
I switched over to TurboTax in tax year 2013 (and used it for 14 and 15), and attempted to file a Form 5405 with the sale date as the date of disposal of the home... and it errored out. It would only allow a date for the current tax year, not the calendar year.
In tax year 2012, we did have a separate schedule D (showing a loss) for the house, but no 5405. We did not pay back the credit on our 2012 tax year taxes.
As a bonus, I completed and submitted my 2015 taxes... and *then* received one more W-2, so I need to amend the 2015 return in any case (i.e., it doesn't account for the W-2 *and* it has repayment of the credit).
So my questions:
1. Is my understanding of the repayment credit correct? Do we no longer need to repay it as of calendar year 2013 (when it was sold) or would it be calendar year 2011 (when we moved out, leaving the home vacant)?
2. If so, how do I amend all of the returns? Do I need to do 2012, 2013, 2014, and 2015?
3. Since there are apparent repercussions for each year from tax year 2013 on, do I need to submit them sequentially or all at once?
4. Should I just deal with an accountant? Is this super complex?
Feel free to pepper me with follow-ups if needed. Thank you!
Response by poster: We did live in the home for 10 months of 2011, but also abandoned it that same year.
posted by hijinx at 2:12 PM on March 6, 2016
posted by hijinx at 2:12 PM on March 6, 2016
Best answer: Due to a screwed up 1099 last year (thanks E-Trade, send me a corrected 1099 on Saturday April 11), I learned a lot of ugly things about how filing an amended return works. And this was for a pretty simple & straightforward re-file.
If you don't want to pay a professional to do it, be prepared to spend a lot of time on it. (Make that "what's my time worth" calculation..)
I spent about 10 hours total on the phone with the IRS (mostly on hold waiting, so I could do background tasks), and maybe 2.5 hours at an in-person location, in addition to probably 20 hours collecting documents, writing up responses, mailing responses etc.
I spoke to 4 different IRS reps (1 in person, 3 on phone). Each gave different answers (not even slightly different, sometimes radically different). In the end it was sorted out, and we did not owe any additional tax or penalty. In retrospect, it would have been easier to just have paid the money, but you know, the principle of it and all that.
So, looking at all that, depending on how much you may owe (repayment, penalty & interest, additional taxes), you may want to just pay someone to deal with it.
posted by k5.user at 8:11 AM on March 7, 2016
If you don't want to pay a professional to do it, be prepared to spend a lot of time on it. (Make that "what's my time worth" calculation..)
I spent about 10 hours total on the phone with the IRS (mostly on hold waiting, so I could do background tasks), and maybe 2.5 hours at an in-person location, in addition to probably 20 hours collecting documents, writing up responses, mailing responses etc.
I spoke to 4 different IRS reps (1 in person, 3 on phone). Each gave different answers (not even slightly different, sometimes radically different). In the end it was sorted out, and we did not owe any additional tax or penalty. In retrospect, it would have been easier to just have paid the money, but you know, the principle of it and all that.
So, looking at all that, depending on how much you may owe (repayment, penalty & interest, additional taxes), you may want to just pay someone to deal with it.
posted by k5.user at 8:11 AM on March 7, 2016
This thread is closed to new comments.
posted by michaelh at 1:09 PM on March 6, 2016