In our last blog post we discussed the IRS tax credit for first time home buyers under new laws that extend a military member’s opportunity to take advantage of the first-time home buyer’s tax credit. The Homeownership and Business Assistance Act of 2009 now extends previous benefits for military homebuyers–there is a higher income limit, a new tax break for home owners who buy a “replacement principal residence” plus an longer deadline under qualifying circumstances.

Military members and some federal employees “serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit.” The IRS adds, “Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.”

How do you apply for this tax credit?

Those who applied for VA home loans and meet the qualifying criteria for purchases made in 2010 have the option of claiming the tax credit on either the 2009 return or 2010. For qualifying purchases in 2009, borrowers can choose to apply for the credit on returns for 2009 or 2008. To apply for tax credit in a year that has already been filed, IRS instructions say “…use Form1040X to amend your return for that year, along with Form 5405, First-Time Homebuyer Credit and Repayment of the Credit (see the instructions for help with the form), and a properly executed copy of a settlement statement used to complete the purchase.”

One of the most important things to remember about applying for the tax credit is that the IRS requires documentation. According to IRS rules, “Purchasers of conventional homes should include a copy of Form HUD-1, Settlement Statement, or other settlement statement, showing all parties’ names, property address, sales price and date of purchase. Purchasers of mobile homes who are unable to get a settlement statement should include a copy of the executed retail sales contract showing all parties’ names, property address, purchase price and date of purchase. Purchasers of newly constructed homes where a settlement statement is not available should include a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.”

Don’t let the fact that you’ve already filed a tax return in the year you purchased the home keep you from claiming the tax credit–filing an amended return is not an unusual process and for those who owed more tax in a particular year than was previously expected, the first-time home buyer tax credit could be an important offset for any amount still owed to the government. Learn more at the IRS official site.