Archive for the ‘Housing’ Category

Status update on IRS Offer In Compromise (OIC), tax return, and First Time Homebuyer Credit Allocation

Thursday, April 22nd, 2010

If you haven’t read my previous blog regarding this, you should read it first.

My husband and I finally decided to break down and send in our tax return with the First Time Home Buyer Tax Credit, despite our concerns of possibly losing $4k because of my old tax debt.  We just really needed the money now, so much that $4k is better then waiting until next year for $8k.  Ugh.

I still had no 100% firm answer from the IRS on whether or not they would take half of the credit and apply it towards my back taxes.  But the general consensus was that we get to designate where the credit goes, not the IRS.  It’s hard to accept that the IRS would ever let you decide something like that when you owe them money.

So we filed our taxes by mail this month.  I sent it certified, which I recommend everyone do.  I have had times where the IRS would actually input a later date then when it was really delivered.  Thank goodness I had delivery confirmation.  I had to send that in to them and they updated my account.  If I hadn’t had that, it would have been seriously delayed in processing.  And trust me, if you are filing an injured spouse form, have an offer in compromise, or are applying for the First Time Homebuyer Credit, they will take their sweet time. 

Anyway, it was delivered 4/7/2010.  I called yesterday to see if there were any updates, but they told me it’s too soon for them to even see it.  I was told it would take something like 8 weeks to process.  I can almost gaurantee it will probably take longer because I have so much going on with it.  Which is really irritating.  I will keep you all posted though when I hear something.  I will be calling and checking in periodically.  Which I also recommend anyone in a similar situation do. 

Last year we filed the Injured Spouse form.  There were all kinds of issues.  A lot of back and forth, send this, send that, nonsense.  And I tell you, me calling and hounding them was way more productive then waiting for mail correspondence.  I would find out important things that had to be done by phone, then get the notice about it needing to be done in the mail, two weeks later.

Oh, and be SURE to include a copy of your HUD-1 settlement statement from your home purchase WITH your tax return AT THE TIME YOU MAIL IT.  I believe they initially didn’t require that before they revised the tax credit.  If you send it separate from your return, it could delay things.  And I also do not believe you can file electronically if applying for that credit. So be prepared, because filing by mail takes way longer then what you might be used to when filing electronically.

I also want to add, for anyone who might be wondering, we use TurboTax for our taxes.  I buy the business package because I am self-employed.  For anyone who thinks you need to pay a tax guy to do your tax return, you really don’t.  And my situation is complicated.  I have my business, my husband’s W-2 income, student loan interest paid, Making Work Pay credits, Offer In Compromise, Injured Spouse, expenses of running a business out of my home, vehicle expenses, equipment write offs, and the First Time Home Buyer Credit.  But, in all my years of using Turbo Tax, I have never had a problem getting everything in there correctly.

We have bought our home and are finally moved in.  So even though I have to deal with all this IRS nonsense… I couldn’t be happier!

How the IRS Offer In Compromise effects the First Time Home Buyer Tax Credit

Wednesday, March 10th, 2010

I have run into quite the dilemma!  If you have been following my blog, then you know that I had my IRS Offer In Compromise accepted in 2009.  When you have an OIC accepted, you must agree to let the IRS take any tax refund you are entitled to for the year the OIC is accepted.  So for me, any refund I am owed for 2009 will be kept by the IRS. 

 The tax debt I owed on was acquired prior to myself being married and was a very long time ago.  So my husband is considered an “injured spouse” in IRS terms and none of his refund is ever taken to pay my tax debts.  So we know with certainty that his income tax refund will go to him and not be used to pay my old tax debts even though we file jointly (we did this last year too).

My issue here is that my husband is buying our first house this year.  It’s going to be in his name only, not mine.  So he will be be getting the first time home buyer tax credit.  If he files taxes separate, he only gets $4k for the credit.  If he files jointly with me, then he gets the full $8k credit.  Which makes it seem like me being added to the taxes involves doubling the credit… which would make it seem like 50% of the credit is considered mine.  My concern is that the IRS will take that additional $4k (50%) as if it were my half and apply it to my old tax debt. 

Now I have looked all over the Internet for information on how the two work together, but there is NOTHING that I could find.  So I called the OIC department and asked the lady who accepted my OIC.  She told me she “believes” that the IRS will not take any of the first time home buyer tax credit to pay my back taxes per my OIC agreement.  She was not 100% sure of that though.  I told her I wanted a firm answer and something in writing.  She refered me to the IRS Tax Law department.  The woman there said the same thing… that she was pretty sure they wouldn’t take that money from us… but she wasn’t 100% sure.  She refered me to the Injured Spouse department.  The guy there explained that the there is no set rule designating where those funds must be allocated in any certain situation.  That the IRS will apply them however we say to on the Injured Spouse form we must fill out.  So basicly, my husband has to put that the whole $8k is supposed to go to him.  This IRS guy could not give me any documentation to support this and I didn’t feel very confident about what he was saying.  I can just see them saying that, we fill out the form saying the money goes to my husband, and then they say “no… it doesn’t work that way”… and they take the $4k from us.

We really need the money now.  Being that we have to borrow against it in order to get our house.  But at this point feel like if we file for it on our 2009 taxes that we are taking a huge risk of losing 50% of the credit to the IRS.  We can always wait until 2010 tax filing to claim the credit in full, but that will make things hard on us as we would have to come up with the money to pay back the loans for our purchase expenses. 

Does anyone out there have any firm information on this situation?  It would be greatly appreciated.

Home owners and their lack of responsibility.

Tuesday, November 24th, 2009

As you may or may not know from reading my previous blogs, my husband and I have been on the hunt for our first home for a few months now.  It’s been quite the adventure to say the least.  I have learned a lot along the way and there is one subject that I would like to talk about… home owners and their lack of responsibilty!

It’s been amazing to me to go into fairly modern housing developments with spacious single family homes, to see that the houses are in ruins.  These are homes that were not too long ago, gorgeous.  There, of course, is a difference between losing your job and not being able to afford the upkeep of a large home versus just being a lazy slob.  I can always tell where the lazy slobs live.  Those are the ones that can’t even bother to clean up the trash in their yard or control the weeds and have sheets for curtains. 

I’m sorry, but you have no business owning a home if you don’t have anough motivation and sense to at least take care of your investment.  Usually, I say “to each, his own”, but in this case, what you do effects everyone around you financially.  Unless you developed some medical condition and have bad circumstances, then there is no excuse.

I was in a Dominion housing development and passed by this home that had potential to be lovely.  The houses on each side were well kept.  This house, however, looked like the garage door was used as a shield in a war!  It had dents all over it and was hanging at an angle.  It clearly didn’t work anymore.  Through the open gap you could see piles of what looked like wall to wall garbage inside.  Outside wasn’t much better… trash and miscellanious crap strung about.  There were two young and healthy looking teenage boys out front playing around.  It made me think about my days growing up… if that were me, my parents would have made sure I had that all cleaned up immediately.   With two strong boys living there, why isn’t that place cleaned up?

I think it should be mandatory that if you are a homeowner you must abide by rules to keep your property clean and appealing.  I’m not saying it needs to be spotless or completely in tip top shape, but just that there should be rules about people turning homes into eye sores.  If you can’t take care of your home, then you have no business being a home owner.

Another thing that just kills me… is going into these foreclosure homes and seeing the condition people leave them in.  I went into a home that was at one time a $180,000 home.  It had close to 2,500 square feet and a very unique spanish style architecture inside with massive vaulted cielings and archways.  I walk in and all the carpet and flooring is gone.  Almost every wall is infected with mold, has holes, and dirt/scuff marks/stains.  The mold problem was really bad and freaked me out just going inside.  Many of the cabinets had been ripped out and the appliances were missing.  The outer garage door was gone and a massive piece of plywood blocked it off.  The home had been reduced to $95k, but my agent said there was no way the bank would ever get that much with it in that condition.

That was just one of the many destroyed homes I have seen recently.  Just completely neglected and mistreated by home owners that just don’t care.  Many of these people who lose their homes become hateful and veangeful towards the bank who is taking it back.  Why?  It’s not the banks fault that either you screwed up and weren’t responsible or that you had some terrible life altering situation and you can’t manage any more.  Why punish the bank just because you are screwed?  The bank is simply trying to cover their backs so they don’t end up like you… bankrupt.  They are simply doing what YOU AGREED TO in your contract.  You can’t blame the bank for what’s happening to you.  I can’t understand why these people who end up in foreclosure can’t just vacate with some respect and grace.  Don’t try to make everyone else suffer along with you.

I had an interesting thought the other day while checking out a neighborhood we like.  I feel like this point in time is an opportunity for change and sort of… well… a “cleansing” period.  People who never should have had homes are being forced out to allow people with some sense to take over.  Now before you go cussing me out… please know I do not mean that statement towards anyone who has suffered circumstances beyond their control.  I realize a lot of people out there are suffering and being evicted because of things they had no control over and I truly am sorry for them.  I am only talking about people who somehow got a home, had no intentions of maintaining it from the beginning, and just decided screw paying the mortgage.

I spoke with an older woman in that same neighborhood.  She had been there since it was first developed in 1996.  I asked her how she fealt about it currently.  She said “don’t let the less appealing houses around here scare you away. This really is a great community.  Most of those people are losing their homes and won’t be here much longer. A lot of them have already left and we really don’t have any problems in this area.”  She then proceeded to point out the homes that were previously foreclosures and are now being renovated and made like new again by someone with some sense.

It’s just sad to me.  People just don’t take pride in their investments and their lives anymore.  They don’t care about their neighbors or if they live like slobs.

This also got me thinking… I hope that with all the tax credits, grant programs, and foreclosures… that we don’t end up putting more idiots into these homes that won’t take care of them.  I truly hope we don’t see a major downfall in quality of neighborhoods because people with lesser income get in there and can’t afford the upkeep.  I think part of the problem is a lot of people who buy a home have that “apartment mentallity”.  Meaning, when you live in an apartment you don’t have to take care of anything.  There are no upkeep expenses besides your rent.  So these people move into a house, not realizing that if the roof goes bad, they have to pay for it.

It’s a sad state we are in.  Just another topic to add to my long list of disappointments.