IRS Form 8396 walkthrough (Mortgage Interest Credit)

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This video is for qualified homeowners who are looking to take the mortgage interest credit as a dollar-for-dollar tax reduction on their tax return.
You can claim the mortgage interest credit only if you were issued a qualified
Mortgage Credit Certificate (MCC) by a state or local governmental unit or agency under a qualified mortgage credit certificate program.
Homestead Staff Exemption Certificates, and certificates issued by the Federal Housing Administration, Department of Veterans Affairs, and Farmers Home Administration, do not qualify for the credit.
The home to which the certificate relates must be your main home and must also be located in the jurisdiction of the governmental unit that issued the certificate.
If the interest on the mortgage was paid to a related person, you cannot claim the credit.

[@Kartheeks-we9nr]

Hi sir this is kartheek from India, I like your way of presentation, can you please make a video on 1120 multiple states tax filing that would more useful to me

[@teachmepersonalfinance2169]

I will try, but I'm not clear on what you would specifically like me to include. Could you give me more specifics on what you'd like to see in a walkthrough?

[@EPPOTTER-k6i]

Hello sir, I am looking into the MCC information, is there a penalty for paying off house early with a MCC in Texas?

[@teachmepersonalfinance2169]

I do not know definitively about Texas MCCs, but I was able to pull up some information. It appears that early payoffs might be subject to MCC recapture, but I'm not sure what other restrictions apply.
thetexashomebuyerprogram.com/uploads/Revised-mcc-fact-sheet-06262020.pdf

[@EPPOTTER-k6i]

@@teachmepersonalfinance2169 thank you so much for that information. I wonder if the 9 years of sale is the same length for early payoff..

[@teachmepersonalfinance2169]

Please feel free to check out our article, where we've written step by step instructions to help you walk through this tax form! www.teachmepersonalfinance.com/irs-form-8396-instructions/
If you’re looking for tutorials for other IRS Forms that you can file directly through the IRS website, check out our free fillable forms page: www.teachmepersonalfinance.com/free-fillable-tax-forms/

[@katrinamizuuchi5466]

If my interest paid is $22,500 and MCC rate is 20% am I able to put $4,500 on line 3 since line 2 doesn't exceed 20% or am I still capped at the $2,000?

[@teachmepersonalfinance2169]

From my read on the form instructions, IRC 25(a)(2)(A), and IRS Publication 530-Tax Information for Homeowners, it appears that the $2,000 limitation applies if the MCC rate is greater than 20%, but not if the MCC rate equals 20%. It appears that the only other applicable limitation in this case is your tax bill--you can use this credit to reduce your tax liability to zero, but not beyond that. Anything beyond that may be carried forward for up to 3 future tax years, or until used, whichever comes first.