Carryforward Of The District Of Columbia First Time Homebuyer Credit, Form 8859 (2023)

Form 8859 helps claim any unused portion of the District of Columbia's First-Time Homebuyer Credit from previous years. This credit helps eligible first-time homebuyers reduce their tax liability.

What is Form 8859?

Form 8859 is specifically for residents of the District of Columbia who have purchased a home through the First-Time Homebuyer Credit program. It allows you to carry forward any unused portion of the credit from the year you purchased the home to future tax years. This means you can still benefit from the credit even if your income initially limited its full use.

Who should use Form 8859?

  • District of Columbia residents: You must be a resident of D.C. and have purchased a home through the First-Time Homebuyer Credit program.
  • Unused credit: You must have had unused credit from the original purchase year due to exceeding the income limit or limited tax liability.

Key points about Form 8859:

  • Carries forward unused credit: You can only claim the unused portion of the credit from previous years, not the entire credit amount again.
  • Credit amount: The original credit was capped at $5,000 ($2,500 for married filing separately) or the purchase price of the home, whichever is lower.
  • Income limits: The credit phases out for those with modified adjusted gross income (AGI) exceeding $70,000 ($110,000 for married filing jointly).
  • No carryback: You cannot carry the unused credit back to previous years.

How to file Form 8859?

Step 1: Gather information: You'll need your previous year's Form 8859 and your current year's tax return information.

Step 2: Calculate unused credit: Line 1 of the form asks for the previous year's carryover credit. Line 2 involves calculating the limit based on your current year's tax liability.

Step 3: Claim the credit: Enter the smaller amount of the two calculations on Line 3 and include it on your Schedule 3 (Form 1040) for the current year.

Step 4: Remaining carryover: Line 4 shows any remaining unused credit that you can carry forward to future years.

For the current year's Form 8859, click here.