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Worker, Homeownership, and Business Assistance Act of 2009
On November 6, 2009, President Obama signed into law the "Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548)." This new bill primarily deals with extension and expansion of the homebuyer credit, net operating loss carrybacks, and increased penalties for late filing of S corporation and partnership tax returns. Homebuyer Credit Extended and Expanded The new law extends the deadline for qualifying principal residence purchases from November 30, 2009 to April 30, 2010. Additionally, if a buyer enters into a written binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle (close) on the purchase. The June 30, 2010 date has been extended to September 30, 2010 under the "Homebuyer Assistance and Improvement Act of 2010." The maximum credit amount remains at $8,000 ($4,000 if married filing separately) for a first-time homebuyer –– that is, a buyer who has not owned a principal residence during the three years up to the date of purchase. But the new law also provides a “long-time resident” credit of up to $6,500 ($3,250 if married filing separately) to others who do not qualify as “first-time homebuyers.” To qualify this way, a buyer must have owned and used the same home as a principal residence for at least any five consecutive years of the eight-year period ending on the date of purchase of the new principal residence AND settled on the home AFTER November 6, 2009. For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns. Higher Income Limitations The new law raises the income limits for people who purchase a principal residence AFTER November 6, 2009. The full credit will be available to individuals with modified adjusted gross incomes (MAGI) up to $125,000 ($225,000 if married filing jointly). Those people with MAGI between $125,000 and $145,000 ($225,000 and $245,000 if married filing jointly), are eligible for a reduced credit. Those with higher incomes do not qualify. For a principal residence purchased PRIOR to November 7, 2009, existing MAGI limits remain the same. The full credit is available to taxpayers with MAGI up to $75,000, ($150,000 if married filing jointly). Those with MAGI between $75,000 and $95,000 ($150,000 and $170,000 if married filing jointly), are eligible for a reduced credit. Those with higher incomes do not qualify. New Requirements There are several new restrictions on the homebuyer credit for purchases of a principal residence that occur AFTER November 6, 2009: Dependents are NOT eligible to claim the credit. No credit is available if the purchase price of the principal residence is more than $800,000. A purchaser must be at least 18 years old on date of purchase or if married, the spouse is at least 18 years old on date of purchase. Purchasing a principal residence from someone related to the taxpayer's spouse such as the spouse's parents, grandparents, or children will disqualify the taxpayer from claiming the credit. Members of the Military & Certain Federal Employees Qualified military personnel and certain federal employees who are serving outside the United States on official extended duty service have an extra year to purchase a principal residence in the United States and still qualify for the homebuyer credit. An eligible individual must purchase or enter into a binding contract to purchase a principal residence by April 30, 2011, and settle (close) on the purchase by June 30, 2011. Click here for more details on the Homebuyer Credit. Net Operating Loss (NOL) Carryback The election to carryback an applicable 2008 net operating loss (NOL) from 2 years to EITHER 3, 4, or 5 years has been extended to include applicable 2009 NOL's. This new law is available for most taxpayers, not just eligible small businesses. Increased Failure-to-File Penalties for Partnerships & S Corporations For tax years beginning in 2010, the penalty for filing a federal partnership or S-corporation tax return late will increase from $89 to $195 per partner/shareholder for each month, or part of a month the tax return is late, up to a maximum of 12 months. View the Entire Act (Tax Bill) Passed By U.S. Congress Download File
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