CNN news story on $8000 credit has me confused

[ponderous]

A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision.

Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:

"I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"

Not exactly. Billings won't get $8,000 on top of his current refund, but he would turn that small refund into a much larger one. If his total tax liability came to $6,000, but he had $7,000 withheld from his payroll, he would normally receive a $1,000 refund. With this credit, his refund would total $8,000. If the credit were non-refundable, as was originally proposed in the Senate version of the stimulus package, he would have only received $6,000, or the total amount he paid in.

The above bolded text is copied directly out of a CNN story about the credit and for some reason it has me confused.  Is the bottom line that no matter what the credit amount you receive is, it will not be more then $8000?

[Anonymous]

CNN is wrong -- but, what else is new?!

This is the old, $7,500 tax credit, but amended to:

• increase the credit to $8,000
• eliminate the repayment feature
• change the dates for which it applies

ALL the other features of the 'old' law apply to the 'new' law. In fact, there is no 'new' law, just its amended version included in this 'stimulus' package.Whatever wasn't specifically changed remains the same.

[ponderous]

Thank you.  I thought I had it figured out, and then I read this and all I could think was....I need a drink!  Oh....and I don't even drink.  LOL

So, If I do in fact puchase this year and qualify and let's say my total tax bill was $5000 and I had paid $4000 then I would get a refund of $7000.  Correct?

Lastly, how late can one do an ammended return on this years taxes?  If I bought a house in July or August could I file to get the credit sooner than tax time of next year?

[techman2008]

Yep CNN is Wrong.  When using my tax software for the 7500 tax credit which is refundable add extra refund that you would have gotten.

[Anonymous]

Yes, they are wrong........the lucky ones are those who 'closed' effective 1/1/09 or later because you get $8K + any due or - any owed in a sweet check!!!

That you don't ever have to repay!