Claim up to $5,000 in credit with Form 8859 for the District of Columbia First-Time Homebuyer Credit from 2021, which is available to taxpayers with modified adjusted gross income of less than $90,000 (or $130,000 if married filing jointly).
What is Form 8859?
Form 8859 is a form used to claim a carryforward of the District of Columbia first-time homebuyer credit from 2021. This credit was the smaller of either $5,000 ($2,500 if married filing separately) or the purchase price of the home and was phased out for those with a modified adjusted gross income (AGI) of greater than $70,000 ($110,000 if married filing jointly) and no credit was allowed if the modified AGI was greater than or equal to $90,000 ($130,000 if married filing jointly). To claim this credit, one must complete a worksheet on line 2 and line 4 of the form. Line 2 involves completing the Tax Liability Limit Worksheet with information from their 2021 income tax return. Line 4 allows the individual to carry forward any unused credit until it is utilized.
IRS Form 8859 – Who Needs to Fill It Out?
Form 8859 is to be filled out by individuals who had a District of Columbia first-time homebuyer credit in 2021 to claim a carryforward of the credit in 2022. The credit amount was either $5,000 or the purchase price of the home, whichever amount was smaller. It phased out for those with modified adjusted gross incomes higher than $70,000 ($110,000 for joint filers). They should complete the Tax Liability Limit Worksheet on line 2 of the form. The worksheet takes into consideration the applicable 2022 credits/adjustments for the filer if those credits/adjustments are allowed and taken on the 2022 income tax return. Finally, any unused credit from line 4 on Form 8859 can be carried forward until it is used.
Step-by-Step: Form 8859 Instructions For Filling Out the Document
To begin, you must first complete Form 8859 to claim your carryforward of the District of Columbia first-time homebuyer credit from 2021. Follow the instructions on the form carefully, being aware that the original credit amount was either $5,000 or the purchase price of the home, whichever was less. The credit also began to be phased out if your modified adjusted gross income (AGI) exceeded $70,000 (or $110,000 if filing jointly). Line 2 must then be calculated using the provided worksheet, with the total of any credit/adjustment taken on your 2022 tax return being subtracted from line 1. Line 4 must then be filled out, with you only being able to carry forward any unused credit from prior years. Filling out any form is a complicated process – make sure to read and follow all the instructions very carefully.
Below, we present a table that will help you understand how to fill out Form 8859.
| Information Required for Form 8859 | Details |
|---|---|
| Carryforward of First-Time Homebuyer Credit | Report credit from 2021, calculate line 2, carry forward unused credit |
Do You Need to File Form 8859 Each Year?
Yes. If you are eligible and need to claim the carryforward of the District of Columbia first-time homebuyer credit from 2021, you need to complete Form 8859 each year. You can carry forward any unused credit from line 4 of your prior year Form 8859 until you have used it up – the original credit amount was the smaller of $5,000 ($2,500 if married filing separately) or the purchase price of the home. The credit was phased out if your modified adjusted gross income (AGI) was greater than $70,000 ($110,000 if married filing jointly). Make sure to also complete the Tax Liability Limit Worksheet on line 2 of Form 8859 to calculate the exact amount you’re able to enter.
Download the official IRS Form 8859 PDF
On the official IRS website, you will find a link to download Form 8859. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 8859 and get started on your taxes today!
Sources:
