Child support arrears & $8,000 tax credit

[mom2three2009]

What is the name of your state (only U.S. law)? Indiana

Hi--

My ex owes approximately $10,000 in child support arrears. He just told me recently that he will be getting the $8,000 credit for buying a home in 2009. CSE does have an income tax intercept set up so that they can take his tax check. I'm wondering if this $8,000 tax credit will be subject to the tax intercept. Ex seems to think it will not be unless he tells them to go ahead and apply it to his arrears, but that just doesn't make sense to me.

Just wondering if anyone can answer this for me. I've searched everywhere for the specifics of how this tax credit works, but haven't been able to find anything pertaining to owing a tax debt.

TIA!What is the name of your state (only U.S. law)?

[Ohiogal]

What is the name of your state (only U.S. law)? Indiana

Hi--

My ex owes approximately $10,000 in child support arrears. He just told me recently that he will be getting the $8,000 credit for buying a home in 2009. CSE does have an income tax intercept set up so that they can take his tax check. I'm wondering if this $8,000 tax credit will be subject to the tax intercept. Ex seems to think it will not be unless he tells them to go ahead and apply it to his arrears, but that just doesn't make sense to me.

Just wondering if anyone can answer this for me. I've searched everywhere for the specifics of how this tax credit works, but haven't been able to find anything pertaining to owing a tax debt.

TIA!What is the name of your state (only U.S. law)?

The tax credit is NOT a separate check. It is an income tax line. He would get a credit towards 8000 in federal taxes. So he may get all or portion of that refunded next year or he may purposely try to underpay his taxes during the year to even it out and get no refund.

[mom2three2009]

The tax credit is NOT a separate check. It is an income tax line. He would get a credit towards 8000 in federal taxes. So he may get all or portion of that refunded next year or he may purposely try to underpay his taxes during the year to even it out and get no refund.

I see what you're saying.

I believe he's calling it a seperate check because he will be amending his 2008 taxes to file for the $8,000 first time homebuyer credit. He's getting a refund in the amount of $4100 for 2008 already (which he has already received a letter stating it will be taken for his child support arrears). He has yet to file for the FTHB credit, but seems to think it will be left up to him as to whether or not it's applied to his remaining arrearage. I think he's mistaken though because it's still a TAX REFUND, which means it can still be off-set to pay any tax debts he has. Am I correct?

[Ohiogal]

I see what you're saying.

I believe he's calling it a seperate check because he will be amending his 2008 taxes to file for the $8,000 first time homebuyer credit. He's getting a refund in the amount of $4100 for 2008 already (which he has already received a letter stating it will be taken for his child support arrears). He has yet to file for the FTHB credit, but seems to think it will be left up to him as to whether or not it's applied to his remaining arrearage. I think he's mistaken though because it's still a TAX REFUND, which means it can still be off-set to pay any tax debts he has. Am I correct?

WHEN did he buy the house? If 2009 then he cannot claim it on his 2008 taxes.

[LdiJ]

WHEN did he buy the house? If 2009 then he cannot claim it on his 2008 taxes.

Sorry OG but that's completely wrong. The first time homebuyer credit is set up so that taxpayers who purchased a home in 2009 have the choice of either amending their 2008 tax return to claim the refundable credit, or taking it on their 2009 return instead.

Therefore yes, it will be an additional check if he elects to amend his 2008 return.

OP, he does not have a choice as to whether or not the 8k will be used for child support. If the CSE has in the proper type of intercept, then that money will get intercepted as well.

[nextwife]

There is a buyer program in which many buyers are getting an instant purchase grant of $8000 against their credit, and using the grant as their downpayment. I've seen several buyers buy this way.

[LdiJ]

There is a buyer program in which many buyers are getting an instant purchase grant of $8000 against their credit, and using the grant as their downpayment. I've seen several buyers buy this way.

I hate to tell you this Nextwife, but the program you are speaking of doesn't have federal sanction...AT ALL.

[nextwife]

I hate to tell you this Nextwife, but the program you are speaking of doesn't have federal sanction...AT ALL.

I'm not a lender - I've seen buyers purchasing our REOS use this through municipal grant programs and other lenders.

[LdiJ]

I'm not a lender - I've seen buyers purchasing our REOS use this through municipal grant programs and other lenders.

There are three things required to claim the credit....the closing date, the address of the property, and the purchase price.

I can see no way to have a closing date if the credit is part of the down payment.

[Ohiogal]

Sorry OG but that's completely wrong. The first time homebuyer credit is set up so that taxpayers who purchased a home in 2009 have the choice of either amending their 2008 tax return to claim the refundable credit, or taking it on their 2009 return instead.

Therefore yes, it will be an additional check if he elects to amend his 2008 return.

OP, he does not have a choice as to whether or not the 8k will be used for child support. If the CSE has in the proper type of intercept, then that money will get intercepted as well.

I defer to the tax professional.

[CJane]

There are three things required to claim the credit....the closing date, the address of the property, and the purchase price.

I can see no way to have a closing date if the credit is part of the down payment.

FYI - When I was helping a friend w/her taxes and she was claiming the credit, it only asked if the house had been purchased sometime in 2008 or the purchase would be complete before the end of July 2009, and then asked for the purchase price of the home.

That was using H&R Block's software. No closing date, no address, nothing except the person's word that they'd bought a house and how much it cost.

[LdiJ]

FYI - When I was helping a friend w/her taxes and she was claiming the credit, it only asked if the house had been purchased sometime in 2008 or the purchase would be complete before the end of July 2009, and then asked for the purchase price of the home.

That was using H&R Block's software. No closing date, no address, nothing except the person's word that they'd bought a house and how much it cost.

I don't know how that is possible, because the first two questions on form 5405 are the address and the purchase/closing date.

The software may have autofilled the address assuming that the person was living in the home they purchased already, but I don't know how that software got around the issue of the date. When the credit was revised on 2/21 the date became even more critical. 2008 purchases go under the old rules and 2009 purchases go undre the new rules.

When homes are sold a form 1099 S is generated by the title company and the info goes to the IRS. I have to assume that the IRS is going to eventually run a matching program.

[CJane]

I don't know how that is possible, because the first two questions on form 5405 are the address and the purchase/closing date.

The software may have autofilled the address assuming that the person was living in the home they purchased already, but I don't know how that software got around the issue of the date. When the credit was revised on 2/21 the date became even more critical. 2008 purchases go under the old rules and 2009 purchases go undre the new rules.

When homes are sold a form 1099 S is generated by the title company and the info goes to the IRS. I have to assume that the IRS is going to eventually run a matching program.

I've been kind of curious how closely the IRS is going to watch this - it was a LOT of money going out, but it's 'paid back' to the IRS over time...

/hijack

[TinkerBelleLuvr]

There are two different sets of rules happening, depending on the date of purchase.