Income Limits on First-Time Home Buyer Tax Credit

Reader Question: "I am looking for help with a question on the 1st time home buyer tax credit... My fiance and I are buying our first home. We are scheduled to close Oct. 23, 2009. My income is exceeds 75k however her income is in the 40k range. Together our incomes are well under 150k. Individually she would qualify for 100% of the tax credit but because of my income I would not. Jointly we would qualify for 100% of the tax credit but since we are not married I don't think we can file jointly, right? We are scheduled to get married in the Spring of 2010, will we have to secretly elope to get this 8k or is there some way around it?"

That's a good question. I guess it depends on whose names are on the mortgage. Yes, you have to be married to file a joint tax return. If your fiance's name is on the mortgage, then it seems that she would qualify for the tax credit (based on her income). That's really a tax law question, so I can't offer much insight.

Here's what the IRS website says: "The credit is reduced or eliminated for higher-income taxpayers ... For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less."

The part that "phases you out" is the 75K income limit for single filers. Depending on your income, you might be eligible for a portion of the credit, but not all of it. But I would imagine that only one of you could claim the credit for the purchase.

I would read through the marriage and income scenarios on this page of the IRS website:
http://www.irs.gov/newsroom/article/0,,id=206294,00.html

Disclaimer: I am not a tax professional, nor do I work for the IRS. So I'm certainly in no position to offer advice on filing a tax claim program as confusing as this one! Anyone with questions about income limits on the home buyer tax credit should refer to the link provided above.