How to complete Form 5405 for a 20-year-old first-time homebuyer credit I never used or received?

Thanks for the info! So this is about a tax credit and not an actual loan? That makes more sense why they're saying it needs to be "repaid." But I'm 100% certain I never bought a house or claimed any homebuyer credit. Is there any way to find out how this got attached to my record in the first place? Could someone have used my information fraudulently to claim this credit? And will I be able to file my current returns while this is being sorted out, or am I stuck until this gets fixed?

The First-Time Homebuyer Credit was indeed a tax credit, not a traditional loan, though some versions did require repayment making it function somewhat like an interest-free loan. It's definitely possible there was an error in IRS processing or potentially identity theft where someone used your information. You can request a "Wage and Income Transcript" and a "Tax Account Transcript" from the IRS which should show if/when this credit was applied to your account. If fraud is involved, you'll need to complete an Identity Theft Affidavit (Form 14039). Yes, you can still file your current returns while investigating this issue. Attach a signed statement to your return explaining the situation along with the incomplete Form 5405, noting you never claimed the credit or purchased a home. This may trigger a manual review, but it should allow processing to continue while the matter is investigated.

Does this taxr.ai thing actually work with old records? My situation goes back to 2011 and I'm not sure if I even have all the documents from back then. Does it need my actual tax returns or can it work with just the IRS notices?

I'm skeptical about using third-party services for tax issues. How do you know they're secure? And wouldn't it be cheaper to just go directly to a tax professional who can actually represent you to the IRS if needed?

It absolutely works with old records. That was actually the most impressive part for me. I only had IRS notices from the current year, but their system was able to piece together the history by analyzing those notices and identifying where the discrepancies began. You don't need a complete set of old returns - even partial information helps their system connect the dots. Regarding security concerns, I felt the same way initially. What convinced me was their explanation of their encryption protocols and the fact that they don't store your documents after analysis. They're also considerably less expensive than hiring a tax professional for this kind of investigative work. In my case, I ended up taking their report to my accountant who said it saved him hours of research time trying to track down the issue.

Wait, so this service just calls the IRS for you? How does that even work? Do they have some special access or something? Seems weird that a third party could get through when regular people can't.

This sounds like a scam. Why would I pay someone else to make a phone call I can make myself for free? And how do they get through any faster than I could? The IRS phone system is the same for everyone. Just sounds like a way to charge desperate people for something they could do themselves.

It's not special access - they use technology to continually dial and navigate the IRS phone tree until they get through to a queue with a reasonable wait time. Think of it like having someone dedicated to repeatedly calling while you go about your day instead of being stuck on hold for hours. No, it's definitely not a scam. You're paying for the time-saving convenience, not for any special access. Sure, you can make the call yourself, but if you've tried recently, you know it can mean sitting on hold for 2+ hours or getting disconnected after waiting. I calculated that my time was worth more than waiting on hold for potentially multiple days trying to get through. They only charge if they actually connect you to an agent.

You might want to request a Wage and Income Transcript from the IRS for the year they think you claimed the credit. It should show all forms filed under your SSN that year, including a Form 5405 if one was actually filed. If no 5405 appears on your transcript, that's your proof one wasn't filed. Also request your Account Transcript which shows any credits applied. If the credit appears there but no corresponding 5405 on your Wage and Income Transcript, that helps demonstrate the error. Lastly, if you still have your tax return from that year (or can get a Return Transcript), that would show you didn't claim the credit on your actual filed return.

Thanks for these suggestions. I hadn't thought about using the absence of forms as proof! I just checked and I can get my transcripts online through the IRS website. I'll request both the Wage and Income and the Account transcripts to see what they show. I definitely don't have my actual tax return from 2008 anymore, but hopefully the transcripts will be enough to show there's a mismatch between what was filed and what credits were applied.

I did try going to the local IRS office - that's where they gave me the 5405 form and told me to fill it out! Maybe I just got someone who didn't know what they were doing? I think I'll try going back and hopefully get a different representative who might be more helpful like in your case.