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Don't Play Games With IRS's Home-Buyer Credit
-- Purchasing your house from a "related person." That's a broad category of people and entities, ranging from immediate family members -- a spouse, parents, children, grandparents, grandchildren -- to a corporation or partnership in which you have more than a 50 percent ownership stake.
-- Buying a home with a spouse who is ineligible, even if you are eligible individually.
-- Acquiring a house through an inheritance or gift.
-- Financing the house through a tax-exempt mortgage bond program.
-- Making too much money -- in excess of $95,000 of modified adjusted gross income for singles, $170,000 or more for married joint filers.
What are the downsides if you claim the credit erroneously and do not intentionally defraud the government? If you are audited, the IRS most likely will ask for the full credit amount back, plus interest and a late-payment penalty.
Bottom line: Don't let this year's tax credit pass you by if you meet the criteria. And if you don't, beware of slick-talking professional tax preparers who tell you that you do.
Kenneth R. Harney's e-mail address is KenHarney@earthlink.net.