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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3170
Experience:  IRS licensed Enrolled Agent and tax instructor
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Filed form 5405 last year after selling home that First Time

Customer Question

Filed form 5405 last year after selling home that First Time Buyer Loan was on. the irs says that in certain cases the loan doesnt have to be paid back. of the 7500, 2500 was paid back in 2010, 2011, 2012. turbo tax gets an rejection when i file showing i need to add form again. the net basis of home sold was a loss but to get it to go through turbo tax, we should $15 gain. We should not have to do form again?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

If you sold the home in 2014 and filed the form with your 2014 tax return you don't need to file it with your 2015 tax return. Form 5405 is to inform IRS that the house was sold or otherwise disposed and you are paying off the remaining credit or, if sold with a loss, you are not required to repay it.

Expert:  emc011075 replied 1 year ago.

Gayle I see you offline now. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

Customer: replied 1 year ago.
I can't figure how to get turbo tax to accept it as I guess the irs still shows it is owed but there was only a 15 gain shown last year. They gave me a link and when I put the info in it stills show owed amount but I'm sure of the basis etc
Expert:  emc011075 replied 1 year ago.

Who gave you a link? Turbo tax and IRS do not exchange information. Turbo tax sends return to IRS and IRS accept it or reject it. There's no back and forth info exchange.

I got a message from another expert who is familiar with this issue. The problem seems to be somewhere in between. IRS haven't updated their database and not including the form would reject your return therefore Turbo Tax will not allow you to remove the form so your return will not be rejected. For Turbo Tax it is more important that IRS will accept your return than making sure you get all your refund you are entitled to. As a matter of fact I run into similar situation before when TT would add a tax the client didn't have to pay and there was no way to override it. Don't get me wrong, your return will still be correct and IRS will not have any issue with it. You just don't get back as much as you could (or pay as little as you should). But that's normal for all retail or online tax preparation softwarers, not just turbo tax. Tax preparation softwares designed for tax professionals are more flexible and let you work around those special situations.

Anyway, the only way to fix it and the other expert agreed is to file your return on paper and attach a short explanation and copy of your 2014 5405. Or if you want some of your refund faster, you can file the way Turbo Tax wants to file, get most of your refund and than amend it to get the rest of it. That what we did in 2008 when it took IRS almost 9 month to process returns with the first time home buyer credit (the nonrefundable one).

Expert:  emc011075 replied 1 year ago.

Any questions? Is there anything else I can help you with today?

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