The current presidential administration has already brought several changes to the country, including Biden’s new home tax credit. But, what exactly is this new tax credit, and how do you know if you are eligible?
At Primary Payroll, we are here to help, which is why we have broken down some of the details of this new $15,000 First-Time Homebuyer Act.
What Is a Home Buyer Tax Credit?
Simply put, a tax credit helps you to directly reduce the amount you owe when it comes time to file your annual taxes. While tax deductions lower your taxable income, tax credits are a more direct source of payment reduction.
Take, for example, if you end up owing $25,000 in taxes once the year is over. If you qualify for the total amount of the home buyer tax credit of $15,000, that means you will then only owe $10,000 in federal taxes.
Anyone who receives more tax credits than what they owe can receive the surplus as a tax refund. For example, if you only owe $5,000 in taxes and are eligible to receive the entirefull $15,000 tax credit, you will receive a $10,000 tax refund from the federal government.
Requirements for Biden’s New Home Tax Credit
To qualify for the First-Time Homebuyer Tax Credit of 2021, you must meet the following requirements:
- Must be at least 18 years old at the time of purchase
- Must be a first time home buyer or someone who has not owned or purchased a home in the last three years
- Must not make more than 160% of the area median income (AMI), which can be determined by using the Fannie Mae AMI Tool and multiplying the AMI by 1.6
- The price of the home must not exceed 110% of the area’s median purchase price of a home
- Must provide settlement statement from closing to your tax-preparer when filing 2021 taxes
Why Choose Primary Payroll Services
With all the new changes to legislation, it can be challenging to stay on top of all of the potential tax credits you and your employees can be eligible for.
With Primary Payroll services, you choose a smaller company, which means we have the luxury of dedicating ourselves wholly to our clientele rather than getting lost in the shuffle with the larger corporations. At Primary Payroll services, you will always receive our highest levels of customer service.
Let our payroll experts at Primary Payroll Services assist you with selecting the right payroll services for your business needs. Call us at 562-595-0066 or request a free quote online.