$7,500 Credit For First-Time Homebuyers May Not Have To Be Paid Back

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Since my post on the $7,500 tax credit for first-time home buyers has over 225 comments and growing, I thought I should point out that both the current House and Senate versions of the Obama Stimulus bill remove the requirement to pay back the credit over 15 years.

If it becomes law, this will be essentially $7,500 of free money for most first-time home buyers. You’ll have to wait until you file your taxes in 2010 to claim the credit, but you might be able to adjust your tax withholding to improve cashflow until then.

According to this CNN Money article, it will also expand the eligible dates retroactively to January 1st, 2009 until the end of June or August.

To be eligible, buyers cannot have owned a home for the past three years, and the new home has to be used as a primary residence. The credit phases out as income rises above $75,000 for singles and $150,000 for couples, and disappears entirely at $95,000 and $170,000, respectively.

Will this really make a long-term difference?

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  1. Again, retroactive through Jan 1st 2009, but what about 2008? As I said in the last post, what about first-time homebuyers who purchased in 2008 before April? I think it’s crap. (I only say that because I’m left out).

  2. The current bills only remove the requirement for homes purchased from 1/1/09. Those receiving the credit in 2008 will still have to pay it back.

  3. We are supposed to stimulate the economy, not just the home sellers. Buyers get the tax benefit but they will pay a higher price to the sellers. The current 15-year interest-free loan setup is much more equitable. No, I don’t think it will make much difference long-term.

  4. I agree Tom… it’s crap. I missed it by a few months.

  5. I see potential to break the system, as there is no time limit to the length you own the home.

    My example would be me and my brother both in the market to buy a home together. Could we both get approved for seperate mortgages, I buy the house first and sell it to him, than put both our names on the mortgage after we both claim the $7500 credit?

    Or is my scenario flawed and we would both be able to claim the credit anyways?

  6. @Jon,

    Both House and Senate versions that do not require it to be paid back also state that if it is sold within 3 years, you are required to pay back the full $7,500 on your tax return for the year you sold it. So what you are trying to do, wont work…

  7. For someone buying a condo for say 75k, this would be like a 10% discount right away. I wonder how it would work if I wanted my wife to buy her first home (she once owned a home but sold it more than 3 years ago so she would qualify for the exemption). Sense she is not on my mortgage or deed would she qualify? This would be the perfect opportunity to invest in a cheap rental property…

  8. For those of us that live in the NYC area, housing prices are so obscene that the income restrictions phase most people out. Our household income and $180,000 and we cannot afford a decent home. Houses from the brady bunch era are going for $550,000 to $650,000. Ridiculous

  9. @Chris,

    This won’t work for 2 reasons in your case.

    Since you are married, the IRS sees you and your wife as one entity…

    Section 36(c)(1) defines “first-time homebuyer” as any individual (and if married, the individual’s spouse) who has not had an ownership interest in any principal residence during the three-year period ending on the date of the purchase of the principal residence.

    So if your wife would be buying, she would not be considered a first time homebuyer because you as her husband have had an ownership interest in a principal residence.

    The other reason, it is for principal residences only. If you buy the house as a principal residence, then decide to convert it to a rental, you must repay the outstanding balance in the year it was converted (not sure how this will work if the new law passes; maybe if you convert it after 3 years of ownership, you don’t have to repay – I don’t know for sure). The minute you start showing rental income on your Schedule E and take this credit (not to mention taking a mortgage interest credit on past returns), you will be flagged for an audit.

  10. what about homeowners who bought a house before they introduced this bill. this is so stupid.

  11. make a long-term difference?

    the answer is YES, since the plan will basically be decreasing tax revenue even more thereby increasing our debt/deficits. furthermore, it will give “young” (first-time homebuyers tend to be younger) people yet another excuse to buy a more expensive house than they probably could afford (“$7500 off the down-payment. YEAH!”). personally, i think you need to stop the foreclosures and perhaps stimulate more home buying with lower interest rates.

  12. @NY Guy,

    Your idea has many holes in it…

    1. There is sort of a time limit (with the current law). You must repay the entire balance due in the year you sell it.

    2. This credit doesn’t work when you are purchasing a home from a close relative (brother can’t claim it if he buys a house from you).

    3. It is $7,500 per home, so if you were buying it with your brother, you could claim $3,750 and he could claim $3,750 (pending you both haven’t owned a house in the last 3 years and the home purchased is >$75,000). You can never get more than $7,500, no matter how many ways you work it.

  13. this might help detroit and the midwest. but in bubbly coastal areas, 7500 doesnt come close to covering even realtor fees. aka this wont help case’shiller index of 20 metro areas

  14. Thank you for this update! I was about to drop the price of my house (I am selling it), and I had just bought it in 2008. I can claim the credit, and I was going to sell the house at a $7,500 loss so that I didn’t have to pay back the credit, and would be able to sell the house quickly. Now, I may keep the price on-par with other homes in the area if I don’t have to pay back the credit anyway.

    While I personally oppose the credit and some of the outrageous spending in the stimulus bill, I will take it if it’s offered to me. Free money.

  15. This makes me and my husband very mad. We are in our mid 20s and were responsible, purchased our 1st home in 2007 and have no PMI because we planned! Well, the only kick-back we got from the IRS was something we didn’t qualify for because we did everything right!

    Now people who purchased a house in a specific time frame where housing prices were dropping and people defaulting and probably got a bargain of a home are getting an additional kick-back?!

    What about all of us who have done things right? We paid off all our credit cards last year too when I got a nice bonus from work. When it came time for me to have a sinus surgery last December all my CC companies started shutting down our account. We ended up having to scale back more on gifts than we had already planned to pay for the surgery (which wasn’t that bad).

    I just feel like we are being punished for doing everything right, by the book per say, and those who messed up are not only getting away with it, they are making money off of it.

  16. If you’re a seller, wouldn’t you be inclined to raise the price of your house by $7500 if you know buyers will be getting that as a credit?

  17. @EBounding

    As you can see from most of the comments, a lot of people will not qualify for this credit, so you would be alienating a good portion of possible buyers.

    This is also what we call a ‘buyers market’ (it is a pretty new term, you may not have heard is used before)… If you raise the price $7,500, any buyers who may have been interested in your home will move on to another house.

    In this market, sellers are having to make drastic concessions to sell their houses.

  18. We closed on a house in April and then this was announced. As an interest-free loan, it still is great. As a credit….well….it’s great, but we were going to buy anyway. The interest-free loan was kind of a nice lesson.

    I’d rather see that $7500 go to schools or someone who needs it than myself.

  19. I qualify for the tax credit b/c I closed on home on May 1st, so I AM eligible for the credit, but according to what is in the currently proposed stimulus package, I will STILL have to repay MY tax credit, but those that qualify for the EXACT SAME tax credit, but who closed AFTER January 1st (instead of the original April 9th date) WILL NOT have to repay it. Now how fair is THAT?
    Why should I have to repay mine but they dont have to repay theirs.

    Either everyone who gets the credit should have to repay it, or no one who gets it should have to repay it. It make no sense, and I emailed Sen Isakson of GA, who sponsored the new Bill (Senate Bill S.253) and told him so. I encourage everyone do so as well. Let your State Senator and Congress person know as well.

  20. My fiancee and I put a contract on a house a few weeks ago. Our closing date is middle of March. My thinking prior to this new announcement was “GREAT!”. We can file on this year’s taxes b/c it’s before April 15th. No doubt we would take the 0% free money loan!

    Well, now I am going to watch this American Recovery Act very closely. I LOVE THE FACT THAT this will be a credit never have to be paid back, but waiting until April 2010 is a bummer for us now. Now we’re just being greedy 🙁

    Regardless, we were going to buy a home anyways. So, this is a windfall for us either way because it did not influence us to buy a home that we were already planning on in the first place!

  21. My fiance and I have been looking for a house, so this is potentially great news for us. I don’t see it making much of a difference in the amount of house we buy, as we would go many months before actually receiving this tax credit. We’ll still buy a house for 100-150k, and use the credit to further beef up our emergency fund or put it toward the mortgage or student loans.

  22. I’m confused. Why do all these new articles (this post and the cnnmoney one) talk about the credit being applicable to houses retroactively from jan 1 2009? i bought in late 2008 and thought i was going to qualify for the loan. has this changed?
    and whether it doesn’t have to get repaid or not, we are definitely going to spend it on improvements to the house, insulation, a new paint job etc. we wouldn’t (or won’t if it doesn’t apply to people who bought in late 2008) be doing these things if we dodn’t get the credit.

  23. How sure are you that you will have to wait until you file your 2009 taxes to claim the credit? The original “credit”/loan carried the option to elect that the purchase was effectively made 12/31/2008, making the refund come on your 2008 tax return. And I simply don’t trust CNN to make accurate articles concerning taxes.

    I would be pretty surprised if Congress kicked that part out.

  24. @Matt & Zach,

    As an accountant, I would just say file your taxes as early as possible… If you file and get the $7,500 before they make any changes, I doubt they will ask you for it back and say you can file for it again next year. Any changes made with this new proposed law would be retroactive to what you have already claimed on your 2008 return (since it is a modification of a current law).

  25. Actually, I’m an accountant too (supposedly finishing up the last of our clients’ W-2s right now, sigh… but hopefully the state board will approve my CPA application this afternoon. WOOT!).

    I just haven’t heard anything about how it really interacts with the program in place. My inclination is to believe that Congress will leave the 12/31/2008 election in place and forgive the previous loans already given out.

    My fiance and I close on the house in the end of February, so I’ve got plenty of time for Kiplinger’s to let me know what’s up.

  26. Large Talons says

    This is absolutely insane. The whole reason the housing bubble was created is because the government has been giving more and more money away to homebuyers in the form of tax credits in order to spur the sale of homes, which can, as we’ve seen, have a long term effect on the economy. The problem is that this means that the prices are being artificially supported by government money. The property values rise because the tax credits drive activity in the market, not because the property is actually worth more. Guess what happens when these policies are changed or expire? This is so stupid, we are just digging ourselves a bigger hole. The real market will not recover until inflation catches up to home prices. So, the only thing that can really be done is to push inflationary policy (keep interest rates low, money supply high) and wait.

  27. Banditfist says

    Wait, some of you have a problem with having your children and children’s children pay for your house?

    This will do little if anything to the housing market. The government is trying to put an artificial floor in the housing market. This is not possible, nor sustainable.
    The bond market is going to give the politicians in Washington a wake up call very soon. I fear when it does, but you cannot borrow your way out of debt.

  28. financePhi says

    As the government continues to interfere with the housing market by trying to dictate its value via policies and artificial price stabilization, it will take much longer for the real economy to recover. A drop in home prices is inevitable, and this scheme will only lead to longer term pain for the housing market and economy at large.

  29. I missed the retroactive date by one week!!! Unbelievably frustrating.

  30. My wife isn’t on the deed or the mortgage of our townhouse(I bought it before we were married). If I sold this to upgrade and put the new house in her name only could she qualify for the credit? She’s never owned a house.

    My thoughts are she could if I wasn’t on the mortgage or the deed, and we would not be able to file a joint return in the year of purchase. That wouldn’t work for us because we need both of our incomes to qualify for the bigger mortgage. Maybe the loophole is we could both be on the mortage but only she would be on the deed.(If that is possible).

    Any thoughts?


  32. Amanda,

    You aren’t settling until 2009 so claim the credit on your 2009 return. If the stimulus bill passes you won’t have to pay back the $7500.00. In the meantime you could adjust your withholding at work to bring home more in your take home pay knowing that you have the $7500.00 credit to offset the shortfall in withholding tax.

  33. Great, help folks buy more house than they can afford, that should get us out of the mess created by people buying more house than they could afford.

    Tired of Stimulus packages. They are trying to stimulate spending. The problem we are in is because people were already stimulated in spending too much by lax underwriting for credit cards, mortgages and HELOCs (they were basically the first spending “stimulus package”). Why can’t we accept bubbles have to pop and instead keep blowing them bigger and bigger, thereby making the inevitable pop worse? Its gonna be interesting when this final bubble pops, hopefully we won’t blow it bigger than we can handle (the US Government bubble).

    I’m confused at the surprise and anger by all those who bought a house and just missed out on the credit. The point of the credit is to encourage buying a house, why would that be applied retroactively? (you already bought the house, why would a “stimulus” plan hand you money, or the other 100 million of us that already own our own homes). I saw some talk about fairness and taxes in the same sentence, thats pretty funny talk for a tax system that’s punishment is directly proportional to one’s part in increasing the country’s GDP.

  34. KLCNJ71….

  35. Amanda,

    I believe the parameters say it has to be 3 years since you owned a home, not 3 years since you purchased a home.

    What is the definition of a first-time home buyer?
    The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit. Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.


  37. r.e. analyst draw conclusion from previous data that $7500 could increase nationwide sales by 10%, i.e., half a million houses in one year.

    the retroactive date and expiration dates are inconsistent among House and Senate. Need to compromise and reach a final version.

    r.e industry is lobbyibg to congress to make the $7500 available to all home buyers, not only first-timers. let us wait and see.

  38. Too be clear, there is no talk of eliminating the requirement to pay back all 7500 “credits”…..meaning those taken out in late 2008?

  39. Why would I buy a house when I know the prices will fall by an additional ~20%?? $7500 isn’t enough to compensate for the declining house prices. Let them reach a sustainable price level.

  40. There is no guarantee that prices will fall an additional 20%. Not to mention, all of the money being thrown into the system by the government will eventually cause inflation and higher interest rates. If interest rates move from 5% to 8%(or higher) that could offset the additional decline in housing prices. Your monthly payment could stay the same or even increase even though housing prices have fallen.

    Every market is different, the Philadelphia area has seen limited prices declines compared to other areas of the country. Your area may crash whereas another may already have bottomed. It’s not going to be easy to call the bottom in both prices and interest rates.

  41. Another socialist democrat shell game to assist low-income (and low sales priced homes) buyers! Despite media claims, housing prices in most markets across the country have seen only minimal declines in single-family housing prices. The earlier law can be changed to reflect the tax credit status, but the so-called financial experts in congress aren’t even aware of the differences in the two bills!

  42. This says I should wait…?


    5. First-Time Home Buyer Credit

    If you’re a first-time home buyer who bought a home after April 8, 2008, and before July 1, 2009, you may qualify for a credit of 10% of the purchase price up to $7,500 on your 2008 tax return. Even if you bought the home in 2009, you can take the credit on your 2008 return, Luscombe said.

    But here’s the rub: The credit is more like a loan and must be repaid over 15 years. The stimulus bill under consideration now may eliminate the repayment rule for homes bought in 2009, but what’s not clear yet is — if the new stimulus plan does eliminate the repayment rule — will people who bought a home in 2009 but claimed the credit on their 2008 return be exempt from repaying the credit? (Those who take the credit on homes bought in 2008 will have to repay the credit, under current law.)

    If you bought a home in 2009 (before the July 1 deadline), your best bet is to wait until the final bill gets signed into law to see whether to claim the credit on your 2008 return or to wait and claim it next year. See story on House OKs stimulus bill.

  43. I always thought this would happen. Once you give the public money you can’t ask for it back. At least, not in a democracy.

  44. Tyrone Biggums says

    I’m actually very happy that the legit credit (the one that doesn’t have to be paid back) is only valid for 2009 purchases. We missed the interest-free loan by just 14 days in 2008. If 2008 purchases were also forgiven, I would have been highly disappointed. $7,500 for a young married couple is a huge amount! Yes, I did miss out on the interest-free loan, but that’s not as big of a deal.

  45. I’m 28 and still renting, just waiting on the sidelines for prices to quit dropping before buying. FYI- i have no debt and 120,000 sittting in my emmigrant savings acct. If the bill passed, a 7500 credit to first time buyers that DOES NOT need to be repaid would have me contacting a buyers agent TODAY.

  46. I’m wondering if those who pay cash for a home will be eligable for the credit? (if it a true credit- and not loan)?

  47. Fobulous in Texas says

    We are building a new home with my new wife and will complete the purchase in April, 2009. I guess i won’t qualify since i didn’t sell my home in time since my previous home was sold in 2007 due to divorce..

    I am not sure why this is even a stimulus package, when it’s just a tax credit, still it’s not money in our pockets. Do they think that this will help the economy??? Welcome to the USSA..

  48. This is a bunch of bull. No one should get a government handout for buying a home. I fear what will happen to this country if this huge spending bill disguised as a stimulus package passes.

  49. I bought my first home in 2007. I wish they made it retroactive to that year. I could REALLY use the money right now.

  50. I am so confused. I closed on my house on dec 31st 2008, if I take this credit on 2008 taxes, will I have to pay it back? Can I wait and get it on my 2009 taxes and not have to pay it back? Should I just wait and see what happens with the stimulus bill before I do anything?

  51. financePhi says

    It doesn’t really matter how much they are offering. I read today that they are trying to increase the credit amount to near $15,000.00 and 4%. People without jobs will not be able to afford homes regardless.

  52. KLCNJ71,
    What if I”m closing on Feb. 25th 2009 and buying a house for much less than $75,000. Could I still take a tax credit for $7500 or would it only be for 10% of the purchase price like the current rules state?

  53. I purchased my home on December 31, 2008 and plan on taking the $7,500 credit. Did I really just miss not having to repay the loan by 1-day? This seems ridiculous — especially since my agent was pushing the transaction along so I could claim the credit in 2008… turns out i could have claimed the purchase on my 2008 tax form even if the closing date and title transfer didn’t process until 2009.

    Is there any good reasoning for the government to not include the people who purchased a home in the original rebate date period starting in April 2008?

  54. I’m confused. So there’s two separate plans now? One for 2008 purchases and one for 2009 purchases? I closed on my first house in May of 2008. Does that mean I get the $7,500 and pay it back over 15 years, or can I choose to wait until tax year 2009 and not have to pay it back?

  55. I have not read anywhere that you have to wait to take your credit until 2009 to not have to pay “them” back the 7500.00 credit. Everywhere i have researched (and i’ve researched) has said that you can claim your home that is purchased prior to July 09 on your 2008 taxes and recieve the credit and the possibility of not have to pay it back if this bill passes. I would do alittle more research before listening to this website.

  56. As far as I can tell there is a hole in the current bill. If you bought a house under the original 2008 housing stabilization bill you get the tax credit that you have to pay back if you bought your house between April and Dec 31st., If you bought your house afterward, it is likely that you will get all of that money for free, and under the most recent Senate proposal, it may go as high as $15,000.

    A few things to consider

    1) For those who complain about people whining for buying a house recently but before Jan 1, consider that the people who purchased houses between then and the beginning of the debate on this bill did were not motivated to buy the house with the tax credit, yet still benefit.

    2) The people who seem most concerned with the tax credit not being fully refundable are those who qualify for the 7500 tax credit under the 2008 bill, but will not qualify for the free money portion of it. It seems that a non arbitrary cut-off would be fully refunding all those who qualify for the first time home buyer credit.

    3) Consider my case. I researched and found that the FHA down payment requirement was going to rise on Jan 1st. So I closed on Dec 31St. I am in a loan that I can afford, and was planing on using the Tax credit slowly, if at all. the government singled to me that I should act before Jan 1 and now I’ll probably be out $15,000.

    4) People like me and those who did follow the government signals and have recently bought a house with the thoughts of the tax credit have a very very high marginal propensity to spend. We’ll put the money back into the economy in a highly fast and effective way, home building projects, consumer spending (70% of the economy) on the house, ect… Probably the best sort of folk to target for a recovery program, cause if you can get a loan now, you are probably fiscally responsible.

    5) If this seems unfair, email your senators they really do pay attention to their mail and the feel of their voters. Tell them to waive the repay of the first time home buyers tax credit for all who qualify for the original bill, not just just the lucky few who’ve purchased in the last 30 days they really do pay attention to their mail

  57. I closed on my house on Dec 23, 2008. I have a BAD feeling that I am going to totally miss out on the “new-and-improved” First Time Homebuyer Tax Credit.

    Why can’t they make the new credit retroactive to the original eligibility dates (i.e. qualified first-time home buyers purchasing homes on or after April 9, 2008 and before July 1, 2009) signed into law last Summer? Why does Congress always change the rules of the game?

  58. My question is, what does buying the home from a relative have anything to do with you getting the credit ? Why should that stop us from getting it. Do they think we didn’t have to put money down as well.

  59. Waive the repayment? That doesn’t make any sense, someone has to repay that money. Are you saying that because you need help with your mortgage the rest of the country should have to pitch in on it? $7,500 is a lot of money and $15,000 is even more, especially since it is eventually going to come out of all of our pockets whether you own a home or not. And the fact that money doesn’t grow on trees (even though the government seems to think that it does) doesn’t help either.

    I think if you need money to put towards a home you should have to pay it back just like everyone else does when they decide to purchase a home. I mean, you can’t even get a loan from family members without having terms and it’s not like the terms for the interest free loan are unrealistic: $500/year for 15 years NO INTEREST, more than generous. If you can’t handle that than you shouldn’t apply for it.

  60. I guess I’m S.O.L. I closed on March 29th 2008. I missed everything apparently, AND I just got laid off. Why is the cutoff date April 9th? Funny-that’s my birthday too. NOT a good one this year!

  61. Emily,
    Go back to Kennebunkport.

  62. Emily, when the gov gives out a freebe like this this you have to jump all over it. Remember, life is a zero sum game. It feels better being on the winning team 🙂

  63. Can I get some clarification on my situation?: I plan to purchase a home in April of 2009 and already filed my taxes for 2008 claiming the 7500 tax credit. Two things I don’t understand, #1, If the bill goes through, because I bought my house in 09, even if I filed in 08, I won’t have to repay the 7500 loan?. #2, Because the bill will go up to 15,000, will I be able to amend my 09 returns and get the rest of the money or because I filed in 08 for the 7500 (even though I hadn’t bought a home yet, and the purchase was in 09) will I become ineligible for that?????

  64. Thanks for the tip Dean but I think you missed the point 🙂

  65. Woah. I’m not saying that taking the credit is bad. I just don’t want my taxes to go up because someone else decides to take it. I think the terms are fine the way that they are. It is extremely naive to think that just because this might become a ‘true credit’ that you aren’t going to be paying it back along the way. I will probably apply for it, but I am fine with repaying it and being responsible for it.

    I mean, I want to be responsible for my down payment but I don’t really feel like being responsible for your down payment, no offense.

    Now I’m going to go back to Kennebunkport, where apparently I am from, and talk about how sad poor people are.

  66. Hey Emily,
    Let me tell you something now. You want to talk about being poor. When we bought our home I was gainfully employed, worked at a steel plant that has been around over 100years, and was by far anything but rich. Suddenly I got layed off in the last week of November. I went from making $37,000.00 a year to half that right now, and was well able to pay for the mortgage easily that we have. We have turned a truck in so we can keep food on the table for our little boy and pay our mortgage, gas and electric and any other things that must come first. On top of that I as well as many who have been working hard for years has been paying into a system for people who are able to work but choose to want to be lazy sit home and live off of those who have choosen to work hard. Now someone like you you wants to tell me and others you don’t want to pay other peoples mortgage. You have alot of nerve. I got a better idea, just give us all the money we have given to people over the years for those who have decided to stay home and live off of us. Then we will call it even and you won’t have to help a true hard working American who has never short cutted the system and has never asked for anything in his life until now. By the way we bought our house in August of 08, had no signs of a layoff, was being told the future was good in the steel making business, if I would of known I was to get layed off I wouldn’t of bought the house. So yea, I will take the money and will pay it all back to the IRS over 15 years so people who choose to live off of me can continue to do so. Mean while we the hard working blue colar people of America will figure out a way to support our familes and keep our homes so the bums can continue their scams.

  67. Talk about selective hearing, or reading! All I said was that the people who claim this credit should have to pay it back. I never said anything degrading towards anyone (well I did make a joke, but it was just a joke, I’m not from Kennebunkport and I don’t talk about poor people).

    I am a blue collar working class as well and the bottom line is I can’t afford to pay for other people taking this credit and even if I could afford it I wouldn’t want to, it’s not my house I don’t get to visit it or borrow it or deduct expenses on it. All I am saying is if you qualify for the credit, GREAT GO FOR IT! But you should also have to pay it back and if you can’t afford the terms than you should not apply for it in the first place, just like any other loan.

    Am I speaking English?!

  68. any help?

  69. You have selective understanding. You couldn’t read between the lines because you didn’t hear a word he said did you. So let me explain this to you, you want to help the people who have been living off the system for years, (not saying that some truly do need help), and pay their rent, their health care, their food bill, etc, etc, etc, that just choose not to work, maybe they will let you use their house, or eat their food when you lose your job , if you haven’t already, but to offer to help the people who have built this country you want to shove your nose up in the air for them and tell them they have to pay it back , NO! , it should be given to people. Heck I don’t even quilfy for it , but I will help the blue collar worker as much as I can. I don’t mine given to those who work hard. If you are really what you say you are (a blue colar worker) then what is the problem with all of us coming together and helping one another at a bad time. People like yourself only want to worry about yourself. You live the life of me, me, me. Yea you said you will pay it back, so would I. The point the other guy was saying not even you should have to pay it back, it should be given, your taxes will go up no matter what any way. The people who get all the things I said earlier don’t have to pay it back. I’m not going to get in a back and forward pointing match with you. If you ask me you shouldn’t even be allowed to make comments on the site because you are sarcastic, insulting, obnoxious and can’t have a adult coversation with people without trying to be little people. This is my feelings about your comments I will end it here and not waste any more good energy on you. I hope you understand that if we don’t start helping the working man & woman this country will fall in on itself and then we will all be left with nothing to call our own. Good Bye

  70. Wow, I am obsessed with this blog and I am strangly thrilled that I just found this thread! Daniel, listen, that is an issue that would require research for anyone so you might have to look into it yourself or hire a CPA to assist you. The other thing is that the bill hasn’t passed yet (I don’t think anyways) and we don’t know what’s going to happen as of this point in time, so it’s probably best to wait and see what actually happens before you start worrying about anything.

    SO, having said that, you have 3 years to amend a return (ex: this year you could amend 2005 but not 2004) so you should be able to just amend your 2008 return and claim any additional credit that is being offered at that time.


  71. *apark*- i feel ya man. i closed on march 13, 2008. 2 days before the expiration of the Nehemiah program. thought i was doing the responsible thing, ya know, taking a fixed rate loan w/ a payment i could afford. it turns out; i should have just taken an ARM while i still could and closed 26 days later. then i could get 7500 free dollars and not pay my mortgage while i wait on my principal to be written down. I’d wind up with smaller payments and free money, and a lower principal loan amount. maybe they’ll introduce a “running with scissors tax credit” that I can cash in on…

  72. James,

    Save the lecture. I never said I wanted to help the people who live off the system where did you see those words? Don’t make judgement calls you can’t back up.

    You’re assuming that everyone that applys for this credit is ‘honest and hard working’, but not all of them will be. If this credit becomes a true credit than more people will have incentive to apply for it when they shouldn’t. Have you seen Form 5405? You don’t have to provide proof of anything, and unless the IRS chooses to audit everyone who claims this credit a lot of people (the same people already living off the system, the same people we’re already paying for) will take it. And then you and me and all the other honest hard working taxpayers will be left to pick up the slack. I say no to that. I am putting my foot down, I don’t want to pay for that kind of thing anymore.

    I will say this again (and again if you continue to whine about my point of view): The pay back terms are more than reasonable, there is absolutely no reason why someone should be complaining about paying back this credit. If the people that claim the credit don’t pay it back than WE ALL WILL END UP PAYING IT BACK, there is no such thing as free money from the Government. But, if you’re ok with that and you want to continue to believe that we’re helping “Joe the Plumber” that’s fine, but it’s also extremely naive. (FYI “Joe the plumber” is a tax evading non-licened non plumber). But hey, if you’re ok with that, than great you leave that wool right where it is.

    If you want continue to argue about this that is fine. My point is valid and I will keep defending it.

  73. After four months of struggling with the bank, I purchased my FIRST home at 5pm on April 8th. What luck I have? Like things took a turn for the worst overnight.. How is it that a 2008 tax credit does not apply to all 2008 home-buyers, but now all home-buyers in this crazy window of time, first time or otherwise, get to claim this. I have written every Senator I can think of in my area, sadly no responses.

  74. While I qualify for the refundable 7500 interest-free loan, I think we, as a nation, should allow the housing market to reach its natural bottom without this kind of “band-aid” manipulation. We are placing a tremendous tax burden on ourselves as well as our children and grandchildren if this stimulus passes. That said, the new and improved $15,000 tax credit does NOT appear to be a refundable one (like the Earned Income Tax Credit). I’ve read the text of the legislation is it appears to be a non-refundable one (as is 99.9% of all tax credits). So those of you who think you will receive a check for $15,000 in the mail probably will be very unhappy. The bill reflects that this credit is a credit against any tax liability you have after you apply all other deductions and available credits. So, for example, you paid $6,000 dollars in taxes for 2009 and after you apply all deductions, etc – your tax balance is $3,000 (tax you already paid or should have paid), then you will receive that amount (or not have to pay that amount to the IRS). The balance of the $15,000 (in this case $12,000) may be “carried over” to the next tax year. So, if you have lots of existing credits and deductions that already make your tax liability 0, you get nothing back from this $15,000 tax credit – as proposed. It is not retroactive (as written) and only applies to those who close on a home after the President signs it into law. The difference with the $7,500 tax “loan” is it IS refundable – even if you have no tax liability you get a check for $7,500 – but you have to pay it back in small increments over 15 years. So before everyone gets all excited and goes out to buy a home, determine and estimate whether, after all your existing exemptions, deductions, etc – you will be able to use this $15,000 credit. It seems to me that higher income earners will benefit much more from this new credit than lower earners who tax liability is much lower. Just my thoughts.

  75. My coworker (who bought her home 2 years ago) says that she went to a H&R block type place and put in her info from 2 years ago and that she was getting the credit from a home purchase in 2006. also someone else who has not bought a home, does not owna home have filed the credit also at one of these places and claims he received it also. it is possible. they day that they will just have to pay it back when they catch it. i guess if its a loan anyways then why not give it to everyone, im sure we all “anticipate” buying a home sooner or later, huh? she did get the credit today

  76. James- I think Emily has a point though. It seems like you think that the people taking the credit are all ‘honest hard working people’ but that isn’t always true. People will take this loan that don’t deserve it and don’t qualify for it. The IRS doesn’t ask for any HUD stmts or anything when you apply for this credit so anyone can. I’ve never heard of the governemtn giving anything away for free so if the people that take this loan don’t pay it back than you and I will have to.

  77. ah, cathy, my point exactly

  78. cindy girl says

    Cathy – your friends have committed tax fraud and will be caught – at some point – just when the interest and penalties (as well as the principal of 7,500) they will owe will bankrupt them. They are idiots and don’t seem to understand the fact that the IRS can pursue them and take everything they have or ever will have. Also, they’re incredibly stupid as they have to pay it back (it’s not a true credit). 7,500 dollars isn’t worth what both of them are in for when the IRS catches on. It’s amazing to me how many dishonest, scheming and just plain moronic people live in this country!

  79. I purchased my home April 8th 2008, I went to H&R block and they told me that I should just apply and get the credit anyway. I said no and I will wait to see what will happen in the next couple of weeks. I’m too chicken to claim the credit, even if I missed the date by a day. Hopefully, the gov’t will give credit for all first time buyers of 2008. I don’t mind paying it back….I was just recently laid off two weeks ago, and the credit will definitely give me a good cushion, just in case I can’t find a job fast enough.

  80. $7,500 credit is soooo yesterday. The new proposal is $15,000 credit and I’m just waiting for it. They’re desperate and will pass it.

  81. My wife (fiance at the time) bought a house in August, she was buying as an unmarried single person first time home buyer. I however have been a homeowner in the last three years. Since we were not married at the time of her buying do we qualify for the full 7500 as a married couple filing jointly, or do we qualify for 3750 married filing separately, or do we not qualify at all? In all that I have read i cant find anything pertaining to our specific situation and would like a little guidance.

  82. After what I have been hearing about H&R block allowing people to engage in tax fraud, I would NOT go there to get my taxes done. You get what you pay for and when it come to taxes, cheaper is NOT better. Lani, if you did apply for that loan and got audited and accused of fraud you could not say ‘oh H&R Block told me to do it’ they are not liable to you. Good for you for sticking it out, it’s not worth the headache and all that extra money you would end up owing to the IRS.

  83. 2soon-
    I hear you! I am sick to my stomach because I was around 10 or so days too early (closed on March 29, 09). In addition, my credit score dropped to 739 from 777 due to the debt to income ratio increase that comes with owning a home (and I took a job that requires I have a shared company credit card with a 30,000 limit that seems to charge to 2/3 full each month). My lender wants to see a 740 before they will consider refinancing. I charge NOTHING and pay my bills on time every month.

    To top it off, there’s a great chance I’m going to be laid off. Oh no, wait for it–it gets just a little better. I thought I would go ahead and get my master’s or additional certification in the potential layoff period. Schools in my area are booked solid and not accepting any more submissions. This economy is really socking it to many of us!!!

  84. If I bought a house in May 2008 but have not claimed the $7500 credit yet, will I still be able to get this if the new bill gets passed? It sounds like I will miss out on both the $7500 and $15000 credits. Is this correct? Should I hurry and file my 2008 taxes so I get the $7500 credit?

  85. Stephen, when did you get married? If you got married in 2008 than you can file as married filing seperately and each claim $3,750- but if you file as married filing jointly you wont qualify because you have owned a home in the last 3 years.

    If you file as Married filing seperately either both of you have to itemize your deductions or both of you have to take the standard deduction.

    So there are a lot of things to consider depending on when you got married and what filing status will benefit you the most. MFS will definetly give you a higher refund b/c you can take the credit but it might increase your tax owed and may not be worth it if you have to pay the credit back and you only actually get like $2,000 of it. I would have someone else file your return for you and figure out which status will give you the greater benefit.

    Sorry if I confused you at all… Basically, talk to your CPA and if you don’t have one now’s a good time to find one but I wouldn’t wait too much longer.

  86. i purchased a house in 2007 the economie was bad then also in march of 2008 i had a heart attack im a single mom i have worked the same job for 10 years i had to be off work with no income for 6 months worked hard to keep my home why cant i get help im back to work but i was a first time homebuyer i feel that is wrong because no help was or is there for me not even from my mortgage company they made me take out a sererate loan for the mortgage i was behind and will take me fifteen years to pay my behind payments and i have worked all my life people out there that dont work draws a check every month because they faked beening crazy or diagnoised as bipolar and is there really a definition for bypolar or is that just a label they draw crazy checks and get put on drugs they get addicted to all i want is help for a heartattack i couldnt help at the age of 48 i have a daughter that got hit by a car two months after my heartattack and shes only 10 i should be the one getting a crazy check not all these drug addict why cant someone who saved for years to get their first home get a break i would gladly pay it back for the help now

  87. One more thing to remember is that the $500/$1000 credit for individuals/couples is pretty much a sure thing. It’s one of the cornerstones that Obama has repeatedly said was non negotiable.

    If you qualify for the old credit of $7500, and you file now, before the stimulus package is signed into law, you, like I, will have to amend your tax return in the Spring to get the individuals/couples credit. Cool! Another $500 check likely in a few months.

    I like getting some of my tax money back, so anytime they wanna cut me a check, I say fine by me. PPL here can whine all they want. Every dime I get back from Uncle Sam this year is either mine in the first place, or I’m paying back without interest. That doesn’t make me a mooch off the Govt dole. That make’s me fiscally shrewd.

  88. .

  89. Isakson’s press release reads: “The amendment would sunset the current $7,500 housing tax credit on the date of enactment.” What does the term “sunset” mean there? In this context, the term “sunset” means that the $7,500 new home buyer tax credit would be supplanted by the proposed $15,000 credit, which applies to all home purchases–not just new homes. “If you are operating under the $7,500 [credit], that’s the one you [have],” says Joan Kirchner, Sen. Isakson’s Deputy Chief of Staff. “Then, from the date of enactment forward, the new one takes over and nobody else gets the old $7,500 [credit].”

    That last sentence makes it official as far as I read it.


    See #2 below


  90. Sorry for the multiple posts. Not sure what the deal was there.

  91. Doc Rcck – I don’t think it matters if you file before the new $15,000 statute is enacted. I think it matters if you bought a home (as a “first-time” buyer”) before the new 15,000 statute is enacted. If you bought as a first-timer before the enaction of this new statute then you’re only option is the 7,500 credit. If you bought as a “first-timer” or an “multiple-timer” after the enactment of the new 15,000 statute then you’re only option is the 15,000 credit. 🙂

  92. So I am on my second house, however my wife is also on the title. The catch is, we bought the house before we were married, and it’s under her old name. Would she be eligible for this credit? We bought the house in October of 2008. I am claiming married on my taxes, however she is not. So if we file separately she should be able to get the $7500. Right?

  93. I suggest that everyone, esp. 2008 First-time home buyers write an email/letter or call their respective senators or congress representatives to make them aware of unfair treatment being meted out.

    If the new law to provide home buyers in 2009 with an amount up to $15,000 is made final, then it must include the 2008 first-time home buyers as they did their bit to do what they could do. Or else it looks like that new bill is a solid slap in the face of those who made a move to buy a home earlier.

    Their thinking is – You bought a home in 2008, well, you must be punished. Lets reward those who waited – they will get a clean check of $15,000 as well as a better deal because home prices have gone down more in the last 6-8 months.

    This is just not fair. Please do write to your representatives and make sure that your voice is heard. We must not be taken for a free ride.

  94. I am impressed by the greed and pride represented by the posts on this thread.

    Let’s make clear in the first place that none of us is Entitled to free money. It’s not Deserved. Prudently administered, it is a nice stimulus that I support, to be sure, but no one should feel Entitled to it. That kind of attitude has already gotten us into plenty of trouble as it is.

    An interest-free loan (which includes “free money” in the absence of interest) or a flat out gift from the government are both great deals — already unfair to the advantage of the homebuyer — for which we should grateful, not resentful.

    Nevertheless, we read homebuyers, having heard of possibilities of a bigger payout to someone else, whining that they aren’t getting more themselves. You’re already getting more than you deserve. Be happy for the free money and don’t look a gift horse in the mouth.

    Other homebuyers complain that they’re not getting any free money at all. You never expected nor deserved it in the first place and are only upset because someone else is getting money that you’re not. Such petty jealousy does not become you.

    A severely dysfunctional relationship between people and money is at the root of our economic problems. This sense of entitlement is not helping anyone.

    Please don’t allow yourself to be tricked into thinking that you deserve money that was not yours to begin with. You can be better than that.

  95. I’m a CPA

    Earlier in the thread, people were upset they didn’t get the 7500 credit because they missed the deadline at closing. Read the fine print people. Its not your closing date that determines the qualification, it’s when you actually take physical possession of the home i.e. your move in date.

  96. Here is some disheartening news.

    From Politico.com….

    “The added Senate breaks include a $15,000 homebuyer tax credit that has proven more costly than first advertised and could very well be dropped as part of the effort to scale back the package.”

    I have also heard this from an email I received from Ken Gear at http://www.fixhousingfirst.com today…

    “There is a strong push to eliminate or drastically scale back the home buyer tax credit. Several newspapers have editorialized against it and a number of interest groups have voiced their opposition”.

    This isnt looking so good.


  97. “Please don’t allow yourself to be tricked into thinking that you deserve money that was not yours to begin with.”
    Nicholas, for someone in my situation, the $7500 tax credit that has to be repaid, is EXACTLY what you say it isnt…..it is MY money to begin with.

    The way the repayment is structured, even w/o interest, it is still money that will come out of MY future refunds, which obviously is refunded to me for withholding MY money in excess of what I owe in taxes. That would be money withheld from my future paychecks, which is simply being advanced to me, instead of withholding a $500 portion each year for the next 15 years.

    Do I “deserve” t. Of Course I do…it’s my own money, plus I ‘deserve” it because the gov’t says that I do, for helping to stimulate the housing market (which didn’t really work out all that well)

    Am I grateful for it? Absolutely! Am I upset about not qualifying for the new credit? Somewhat, but it has more restrictions attached and since my condo cost $92,000, the best i was gonna get was $9200. Not having to repay woulda been nice, but oh well. Cest La Vie.

    I am using it to pay off my Student Loans (FINALLY…woo hoo!) I am trading an 8% student loan for a 0% interest loan. I am quite happy about that.

    And from the looks of things tonight, the “new” tax credit may not even make it into the Bill Obama signs.

  98. Mike,

    The move in date only works if your house is under NEW construction when you buy it, I stress new b/c I don’t believe renovations count. You should probably reread the fine print.

  99. Lauren

    Yes, it does say that however a home is not owned until the deed is transferred to your name and occupancy begins. Kind of a loophole if you will. Essentially, if you close on 03/20 and take occupancy 04/10, you are good to pursue the credit. Enjoy!

  100. It is being reported by AP tonight that the $15,000 tax credit has been stripped from the reconciliation bill.

    “Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said.”

    All this angst, apparently all for naught.



  101. It is being reported by AP tonight that the $15,000 tax credit has been stripped from the reconciliation bill.

    “Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said.”

    All this angst, apparently all for naught.



    More from Huffington Post….

    “A tax break that allowed businesses to write off losses dating back several years was reduced and a measure providing a $15,000 tax credit to homebuyers was pulled. Both actions shaved a combined $50 billion off the package’s price tag – about $13 billion of it carved from the business cuts. Around $75 billion of tax cuts in total were stripped from the package.”

  102. What is ‘it’? Where does ‘it’ say that? I am very curious about this.

  103. That last post was for Mike, I would really like to know where you’re getting this information.

  104. Lauren

    If you own a home, check with your local assessor. The date the assessor has for a sale of a home is always later than the actual closing date, usually a week or so. This is the deed switch. Ownership is defined as the date the closing paperwork is processed, not signed.

  105. Lauren: The IRS considers the date you purchased the home to be the CLOSING date or the DATE OF OCCUPANCY if the home was being constructed (not renovated). The deed issue doesn’t change this. For IRS purposes, you only qualify if you closed (your closing date – disregard deed stuff) within the time parameters (and you meet all other requirements). Trying to “fudge” the date will only get you audited. Sorry.

  106. Cindy, I know that the IRS considers the qualification date to be the date of closing i.e. the date on the HUD statement.

    I’m just surprised that Mike ‘the CPA’ doesn’t know the difference between real estate practices and tax law. I hope Mike hasn’t been allowing his clients to take the refund based on their ‘move in date’ (unless their house was under new construction).

  107. For all of you fuming because you missed the deadline by months…how about missing it by four days!! We purchased our home on April 4, 2008 so we will not qualify

  108. We just bought a house in October of 2008 and claimed the credit on our 2009 tax returns. We received the $7500 credit last week. We did not know anything about this credit (or no interest loan) when we were looking at houses. We did not need it to buy our house and the fact that we were getting this “credit” did not influence the price of the house we bought. We are spending the money on home improvement projects that we could have waited to do until the economy gets better. If we had not recieved it we would have waited to put in new flooring just in case one of us lost our job. I think that this “credit” is helpful. My sister also received it and both of us our doing home projects that put money into our local businesses thus helping people keep their jobs. If we had not received this “credit” we would have waited on our home improvement projects. It is hard to get a home loan right now, any loan as a matter of fact but the people that are still buying, like us, have a low debt to income ratio so this money is not going to pay off other loans or for savings. In my experience it has a high potential to boost our enconomy. If I have to pay it back and others don’t well that’s too bad, I knew what I was getting into.

  109. This is just crap and not fair. The 7500 dollar credit was originally written from april 08 to july 09. Now they change that until january where you don’t have to pay back the credit. I just bought my first home in october. I mean if your going to make the start date of this april 08 then let anyone who bought a house from april 08 on qualify for this 7500 credit without repayment. If you can cut the original credit date in half then you can extend the non repayment. This just irritates me.

  110. 2008 Buyers should be treated same way as 2009 buyers. 2008 buyers should not return back 7500.00 like 2009 byers as 2008 buyers already got hih price for homes and high interst rates 6.5-7 % as compared to 5% in 2009.
    If this is not done, it will be just Unfair for 2008 first time home buyers…..

  111. If my husband and I bought a home 5yrs ago but his name was the only one on it not mine can I now purchase a home in my name and not put his on it and quailfy for the first time home buyers credit?

  112. So I realize everyone is asking the same questions, but I would like someone to clarify for me…My husband and I bought our first house April 30 2008. We took advantage of the 7,500 interest free loan on our 2008 taxes. Apparently now there is now 8,000 in free money for first time home buyers. I have heard rumors/gossip that they are going to change the original 2008 credit so that it too does not have to be repaid. Is there any truth to this or is it just wishful thinking of people?

  113. Wishful thinkin. That would not stimulate spending on home purchases.

    If you are married and one of you have owned a home in the past 3 years you would not be able to qualify.

  114. I also took advantage of the $7500 “interest free loan” on my 2008 taxes. Does this have to be paid back or not? Or is the jury still out?

  115. Hi everyone,

    I also purchased a home in Oct. 2008 and feel that it’s unfair that the new $8000 credit was made retroactive to Jan 09 ONLY. I’m not concerned about the $500 difference, but about the repayment requirement. I suggest writing to your congressman about this; explain that the message we learned from this is to wait and hold out for a better deal, instead of going out their and pumping money into the economy. Isn’t this the worst message to send to us???

  116. I don’t think its fair that those first time homebuyer’s who received the $7500 credit for buying their home in 2008 have to pay it back over 15 years and the following year the credit was increased with no payback. How can we change this?

  117. This is definitely unfair, I purchased a house in Oct 2008, and then the requirement for the 8000 credit was made retroactive only to Jan 2009. I don’t see how half have to pay it back and the other half don’t. Unjust.

  118. It is VERY unfair. When I did my taxes this year (electronically) there were no selections for the $7500 tax credit payback, so I didn’t. I’ll see just how soon they catch up with me on it, for sure, but in the meantime, I have $500 waiting for them…only if they ask for it. I’m not jumping through hoops for this. My experience is that most accountants have NO idea how to handle this anyway. We had to file twice for the $7500 and twice for the $1500 energy improvement credits…hence going electronically this year.

  119. It is not fair to me that we have to pay back the $7500. Purchasing in the time frame that I did, I paid a much higher price for my condo than people that did 6 months later (and they received the $8,000 with no payback). My $7500 is just sitting in my bank account. If we were able to keep this $7500 I would actually use this money to “stimulate the economy”…every last penny!

  120. Okay, with the 2011 tax season almost upon us for 2010 taxes, the first installment for the $7500 is to be deducted from what I receive back from my 2010 taxes. Again, as with others on this thread, I bought in October of 2008 (two months shy of 2009 where they do not have to pay back and get more). I would have held off buying for two more months if I had known this.

    Question here is this…are there any petitions being made individual state congressmen/women regarding the 2008 tax credit vs 2009? I live in Georgia and would love to rally against being held to pay this tax credit back when if I had bought two months later…I would not have. Complete crap and I’d love to get in the face the yahoos who thought this was going to just go away and we would roll over and take it!

    So, if you know of one…where do I sign? Thanks for your help.

  121. There has to be a cut off. And, it’s unfortunate that most of those who bought in 2008 will have to pay it back. But, what about those who bought in early 2008 or 2007 – they got nothing at all – no interest free loan to use as a nice large principal payment or to purchase new furniture for their new home.

    I know a person who purchased in 2008 with nothing down and even financed in their closing costs, they refinanced in 2009 once again rolling all closing costs into the loan, then refinanced again in 2010 again rolling all closing costs into the loan. Every time they could get another 1/2% discount on a loan, they’d refinance, giving no thought to the overall cost or the fact that they were extending their loan back out to the 30 year mark – they were just looking at monthly payments. They now owe almost $20,000 more than the original purchase price of the house and while they are fortunate enough to be in an area with fairly stable home prices, they are almost upside down on their loan. It’s on the market for sale now and after realtor fees are paid, they will not have enough to pay off the loan without coming up with some cash at closing. Because there will be no “profit” on their house (despite the value increasing over the years) after paying off the loan and the realtor, they will not have to pay a penny of it back. And, they are going around bragging about it and about how they’ve taken advantage of the system. That’s where the unfair part comes in. Once again, stupidity and lack of ethics pays in this country.

  122. I took the 2008 tax credit for $7500. I lost my home to a house fire May 2010. Does anyone know if and when I need to pay the 7500 back?? I’ve been reading several different articles and even the IRS website and I really don’t have a solid answer. We no longer live in the home. We haven’t even settled everything with our insurance company yet and have had to hire an attorney. We are not sure we are going to rebuild.

  123. My wife and I are currently paying back 500 $ year from our tAx bought our house in July of 2008. we are currently selling her house in 2015 and we are going to take a loss will we have to continue to pay back $500. if not what form do I need and what steps do I need to take . Thank u

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