Some homeowners who this year began paying back their first-time homebuyer credit are still waiting for their refunds because of an Internal Revenue Service computer glitch associated with that tax break.
The affected taxpayers are those who took the original homebuyer credit on a residence purchased in 2008. That $7,500 tax credit wasn't really a credit at all. It was a no-interest loan from Uncle Sam to help them get into the house.
But like all loans, it has to be repaid and that process began with the filing this year of 2010 tax returns. The payments were reported on Form 5405.
These taxpayers already were unhappy because they didn't get as good a tax deal as homebuyers in subsequent years. When Congress extended this homebuyer tax break, it upped the amount to $8,000 and made it a true credit that doesn't have to be repaid.
So this filing season's holdup of their returns is the proverbial insult to injury.
The IRS says a computer programming issue has delayed the processing of a "small percentage" of returns filed by taxpayers repaying the $7,500 credit.
Many of the affected filers are those reporting a sale or other disposition of the home that qualified for the credit. This means the taxpayer has to repay the credit in full.
Other taxpayers who bought a home in 2008 and now are making a repayment higher than the required annual amount (the minimum annual repayment for the next 15 years is $500) also are seeing delays in the processing of their returns.
And processing delays mean longer waits for any refunds.
If your return and refund are being held up because of the homebuyer credit computer glitch, the only thing you can do is wait. The IRS says it's working on the glitch and things should be smoothed out soon.
Wait, no pun intended, I take that back. You also can go to the special Facebook page to vent your frustration with taxpayers who are in the same boat.
If you haven't filed your return yet, you can expedite the processing of your first-time homebuyer payback filing by taking a couple of extra steps.
Married filing jointly couples where only one spouse received the homebuyer credit for tax year 2008 should file one Form 5405 showing the Social Security number for the taxpayer who received the credit and is making a repayment. For example, a woman bought a house in 2008 and claimed the credit. She got married after the purchase and now files jointly. When the couple files, they need to put her Social Security number on Form 5405.
When a joint-filing married couple is repaying the homebuyer credit that they claimed for their home purchase in 2008, the IRS recommends filing two Forms 5405, one for each taxpayer Social Security number, and making a repayment for each form based on half of the total credit received by the spouses.
And remember that every taxpayer can check return and refund status online.
You also can follow me on Twitter @taxtweet.