Question about that 1st time homebuyer's tax credit.

[ryanshana]

I have a question with this home buyer's tax credit.

So if in your taxes (w/o buying a house) you would have gotten $XXXX, are they going to add the $8000 to the $XXXX or bring the $XXXX up to $8000?

Anyone know?

Thanks

 

[DrCavin]

http://www.federalhousingtaxcredit.com/2009/faq.php#1

# Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer’s tax liability would be reduced by $1,200 (15 percent of $8,000), or lowered from $8,000 to $6,800.

 

[Sorsha]

I have a question with this home buyer's tax credit.

So if in your taxes (w/o buying a house) you would have gotten $XXXX, are they going to add the $8000 to the $XXXX or bring the $XXXX up to $8000?

Anyone know?

Thanks

Yup - I believe that's how it works. Just closed on our first house on July 1 and have have studied this a lot recently.

 

[ryanshana]

Thank you both!