How do I add or remove Form 5405 for the first-time homebuyer credit?

Form 5405 (Repayment of the First-Time Homebuyer Credit) figures the repayment amount (actually, an additional tax) for the 2008 First-Time Homebuyer Credit. The 5405 is also used to notify the IRS that the home was disposed of or ceased to be your main home.

Here's how to enter — or delete — Form 5405:

1. Open your return by selecting Take me to my return on the home screen.
2. On the left side menu, select Federal.
3. On the upper menu, select Deductions & Credits.
4. In the list below, select Show more next to Your Home.
5. Select Start or Revisit next to Homebuyer Credit Repayment.
6. On the Tell us about your homebuyer credit screen, answer Yes to the first question (it was still your main home on January 1, 2019).
   • To delete an unwanted 5405, answer Yes to the second question (it stopped being your main home). Then select Continue and answer Yes on the next screen. You're done.
7. Enter the purchase date and then select Continue.
8. Follow the onscreen instructions.

Related Information:    

• How do I repay the 2008 first-time homebuyer credit?
• What would cause me to have to repay the first-time homebuyer credit ahead of schedule?
• For the first-time homebuyer credit, how would the IRS know if I sold the home?

This doesn’t work. The past 2 years now I have had the same issue. My repayment is over. I actually paid more than what was given. I have a credit of 375.00 of overpayment when you do the look up on the IRS page yet turbo tax keeps rejecting saying I have payment owed to SSN. Which I don’t! This needs to be fixed or I won’t be using turbo tax anymore. Ridiculous 

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@headstronggrafx wrote:

This doesn’t work. The past 2 years now I have had the same issue. My repayment is over. I actually paid more than what was given. I have a credit of 375.00 of overpayment when you do the look up on the IRS page yet turbo tax keeps rejecting saying I have payment owed to SSN. Which I don’t! This needs to be fixed or I won’t be using turbo tax anymore. Ridiculous 

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Turbotax can't fix this.  If the IRS first time home buyer database says you still owe, then you will be rejected for failing to include a payment no matter what tax provider you use.

Lookup your account here.

https://www.irs.gov/credits-deductions/individuals/first-time-homebuyer-credit-account-look-up

If your account is wrong, try contacting the Taxpayer Advocate to correct it.

https://www.taxpayeradvocate.irs.gov/get-help/

If your account is correct, then it is the e-file verification database that is wrong, and Turbotax still can't fix that for you.  But if you mail your tax return, it should get processed correctly. 

Yea IRS shows they actually OWE me 375.00 in overpayment for the homebuyer credit. I just went ahead and printed and mailed everything. Trying to get ahold of anyone to fix this right now is a no go lol 😂 unless you wanna wait and hour on hold ha ha ha 

So the form 5405 fills out and Schedule 2 shows the amount of repayment  on line 10 but when filing electronically it does not mark the 5405 as a form to file.  Last year, our tax refund was delayed because 5405 form was not submitted with the electronic submission.  How do I get form 5405 to submit electronically with the rest of the tax forms?

If you are living in the home and making a repayment, you do not need to file Form 5405, just make the payment on Schedule 2, line 10. If you had used the 5405 last year, you would have quit using the home as your main home and would not need the form this year. Please check your answers and see .Instructions for Form 5405 (11/2021)  | Internal Revenue Service.

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@psederichk wrote:

So the form 5405 fills out and Schedule 2 shows the amount of repayment  on line 10 but when filing electronically it does not mark the 5405 as a form to file.  Last year, our tax refund was delayed because 5405 form was not submitted with the electronic submission.  How do I get form 5405 to submit electronically with the rest of the tax forms?

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If you claimed the credit, you must either make a payment, or file form 5405.  If you forget to add the periodic payment, the IRS computer assumes that you sold the house and need to include form 5405 to report the sale and calculate any remaining repayment amount.  But if you are living in the house, adding the routine payment will also clear the error. 

I followed this process, including going through the "2008 Homebuyer Credit Repayment," indicating that we still live in the home.  We then paid the associated tax.  However, TT did not include form 5405 with our return and now we're being asked to send it.  I've started an amended return but I can't tell how to indicate "include from 5405".

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@jr135 wrote:

I followed this process, including going through the "2008 Homebuyer Credit Repayment," indicating that we still live in the home.  We then paid the associated tax.  However, TT did not include form 5405 with our return and now we're being asked to send it.  I've started an amended return but I can't tell how to indicate "include from 5405".

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If you still live in the home, your annual payment should be on schedule 2, line 10.  If you are paying the amount the IRS expects of you (usually $250 for married filing separately or $500 for married filing jointly) then you don't need form 5405.  You only need form 5405 if you are paying a different amount than the IRS expects.  (It could be you are paying less, because you forgot to include the payment, or it could be you are paying more, because you sold the home and need to pay off the remaining balance.)

Look up your IRS FTHB account and see what the IRS is expecting from you.

https://www.irs.gov/credits-deductions/individuals/first-time-homebuyer-credit-account-look-up

Then print or review your completed tax return to see what is reported on schedule 2 line 10.

Thanks @Opus 17 .  

If you still live in the home, your annual payment should be on schedule 2, line 10.  

Yep, it is.

If you are paying the amount the IRS expects of you (usually $250 for married filing separately or $500 for married filing jointly) then you don't need form 5405.  You only need form 5405 if you are paying a different amount than the IRS expects.  (It could be you are paying less, because you forgot to include the payment, or it could be you are paying more, because you sold the home and need to pay off the remaining balance.)

The letter we got says "Form 5405 is incomplete or missing from your return.  Complete the form with information that supports $500.00 on line 10 of schedule 2."

Assuming that TurboTax included this $500 in our tax (we're married filing jointly), we paid it when we submitted our payment for the year (we had to pay rather than getting a return).

Look up your IRS FTHB account and see what the IRS is expecting from you.

https://www.irs.gov/credits-deductions/individuals/first-time-homebuyer-credit-account-look-up

Per this website, our "Original credit amount" is $8000 and "Total Amount of Credit Repaid Per Reported Disposition" is $500. 

Then print or review your completed tax return to see what is reported on schedule 2 line 10.

It's $500 listed there.

@jr135 

So, most of the problems with form 5405 are people getting the e-filed returns rejected.  It sounds like you filed successfully (did you get your refund?) and now you are being asked "why did you pay us $500 on schedule 2 line 10?"

(Double check, is this letter for your 2021 or 2020 tax return?  It seems early to be getting a letter for the 2021 season.)

That's weird, but the IRS is pretty screwed up overall.  If you claimed the credit in 2008 (when it was a loan) and you are still living in the home, and you did pay the $500 on your 2021 return (or 2020, if that's what year the letter is for), then the IRS had some kind of computer glitch and sent the letter by mistake.  You can send a letter back explaining that you claimed the credit in 2008 and were making your regular payment.  (You might want to include a copy of your 2008 return, if you still have it, and maybe a spreadsheet showing the payments you have made and the amount remaining.)

It sounds like you filed successfully (did you get your refund?) and now you are being asked "why did you pay us $500 on schedule 2 line 10?"

Yes that sounds right.

(Double check, is this letter for your 2021 or 2020 tax return?  It seems early to be getting a letter for the 2021 season.)

The letter is for 2021.  Apparently they're quick this year for some reason.  I didn't even send it in till two weeks ago.  Maybe that's because I had to pay rather than getting a refund.

You can send a letter back explaining that you claimed the credit in 2008 and were making your regular payment.

Will do thanks!