Mortgage Interest Credit

Mortgage Interest Credit

Qualified taxpayers who receive a mortgage credit certificate from a state or local government in connection with a new mortgage for the purchase of their main may claim a credit for a percentage of their home mortgage interest. The percentage is set by the government and ranges from 10 to 50 percent. If the percentage exceeds 20 percent, the maximum credit is $2,000 per year. The itemized deduction for home mortgage interest must be reduced by the amount of the credit. Unused credits can be carried forward for up to 3 years. The credit is computed on Form 8396. If purchase a home using a mortgage credit certificate and you sell the home, you may have to pay back some of the credit.
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11 for taxpayers who file electronically and use Form 8863, Education Credits; Form 5695, Residential Energy Credits; Form 1040 A's Schedule 2, Child and Dependent Care Expenses for Form 1040 A filers; or Form 8396, Mortgage Interest Credit. For electronic returns that do not involve any of these forms, the IRS expects to begin processing on Jan.
(19) This will affect federal income tax returns utilizing these forms: (1) Internal Revenue Service (IRS) Form 8863, Education Credits; (2) IRS Form 5695, Residential Energy Credits; (3) Schedule 2, IRS Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers; (4) IRS Form 8396, Mortgage Interest Credit; and (5) IRS Form 8859, District of Columbia First-Time Homebuyer Credit.
The maximum amount of the credit cannot exceed the sum of a taxpayer's regular tax liability plus alternative minimum tax, if any, reduced by these credits: child and dependent care expense, credit for the elderly/disabled, mortgage interest credit, Hope/lifetime learning credits, and foreign tax credit.
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