Get your first time homebuyer tax credit NOW!

I did some digging around and found out that you can refile your 2008 federal tax return using form 1040X (amended) to get the money back early. The form is a little complicated so I suggest consulting a tax adviser if you are not comfortable with it. Here is the article on the IRS site that says you can refile.

The IRS claims it will take 8 to 12 weeks to process but my past experience has seen it more like 4 weeks. With something as simple as a tax credit it should not take too long or much scrutiny. I would suggest that everyone who is eligible file now to get the money. It would be a great debt payment or savings addition and their is no reason to wait!

Suggested uses for home buyer credit (in priority order):

  • Pay down credit card debt (best)
  • Pay down auto loans
  • Pay down other debts (non-mortgage!)
  • Emergency Fund Savings
  • Roth IRA contribution (up to max--preferred)
  • Other Retirement Savings
I specifically left out the mortgage pay down as I believe a mortgage is good debt and only needs to be paid off early if you are near retirement. Interest rates are generally low on mortgages and you can get better returns on your money in investments. I especially am against paying it down if you plan to sell the property anyway. Houses are very illiquid and your money is better off in an asset that is easier to liquidate and earns more return.

My story for my tax credit:

I just completed my form 1040X to mail off tomorrow. Unfortunately you cannot have direct deposit using this form so I have to wait on a paper check. This may make me wait as I will be in Thailand for 5 weeks on extended vacation. Either way I am happy to get the money!

I will end up with a large sum once my amended return is processed. I plan to send this money directly to my debts to knock off a nice chunk. This will significantly help my net worth and reduce my monthly payments so I can accelerate the others. It will be a big relief to drop a monthly payment!