Members of the Armed Forces and certain federal employees who served outside the U.S. for at least 90 days have an extra year to buy a residence in the U.S. and still qualify for the credit.

    • You close on a home purchase by June 30, 2011

Members of the military and certain other 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. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. if a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. 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.

In both cases, keep in mind that the credit amount you're eligible for begins to decrease for joint filers if your modified adjusted gross income is $225,000 ($125,000 for individuals); it disappears at $245,000 ($145,000 for individuals).

 Well the amount of your credit depends on the price of the home and your income, but generally 10% of the purchase price up to $8000 for First Time Buyers or $6,500 for current home owners.

When you submit your tax return, attach a copy of the settlement you received at closing. Check with the IRS or your tax adviser to confirm what additional documentation may be needed.

Decide Whether To:

    • Apply the credit to your 2010 tax return, filed on or before April 15, 2011

    • File an amended 2010 return; or

    • Apply the credit on your 2011 return, filed on or before April 15, 2011

No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That meant that a taxpayer who owes $8,000 in income taxes and who receives an $8,000 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same examples, assume the taxpayer is in the 15 percent tax bracket and owes $8,000 in income taxes. If the taxpayer receives an $8,000 deduction, the taxpayer's tax liability would reduced by $1,200 (15% of $8,000) or lower from $8,000 to $6,800.

No, you do not have to repay the tax credit if you occupy the purchased home for three years or more. However, if the property is sold during this three year period, the full amount of the credit will be recouped on the sale.