I don't understand why I can't get a refund on my first time buyer MCC

[ewitt1222]

I have my taxes filled out but want to understand before I file

[ErnieS0]

The Mortgage Interest Credit for a Mortgage Credit Certificate is a so-called non-refundable credit. That means the credit will help lower your tax liability to $0, but anything left over will be carried over to next year instead of being added to your refund.

Look for Form 8396 Mortgage Interest Credit in your tax return. That shows the calculation for your mortgage interest credit. Line 9 shows the amount of credit being used on your tax return. Line 17 shows the credit carried forward to next year.

To enter a mortgage credit certificate in TurboTax:

• Click on Federal
• Then Deductions & Credits
• Scroll down to Your Home. Click Show more
• Start Mortgage Interest Credit Certificate

The MCC program helps lower‐income families afford homes. The program gives a dollar‐for‐dollar tax credit for a portion of mortgage interest paid per year, up to $2,000.

[ewitt1222]

I think I’m reading this MCC wrong.  Even tho I was unemployed in 2019 @ 2020 I still paid my mortgage which includes my mtg insurance.  It said somewhere in the turbo tax that I could only claim $2000 per year. Since I did pay my mtg interest why can’t I receive what is owed me for 2019 & 2020”? 
i know I had a forbearance for part of 2020. So why can I not get the money for those two years.  I really would like to get the MCC for those two years.  Please advise

Thanks for your help with this matter

Erich Wittwer

[tygrrgurrl]

Hello, when I enter my MCC, my refund increases by $2000. I understand that the MCC is non-refundable so I'm confused why my refund is increasing. I don't want to file and get an incorrect refund then get audited or wind up owing the money back to the IRS. Any idea why my refund is increasing when I add the MCC?

[Cynthiad66]

Yes.  The credit is an additional deduction that lowers the taxes on your return.  That is what it is supposed to do when you enter the credit.  It says it is a non-refundable credit which means that A nonrefundable credit essentially means that the credit can't be used to increase your tax refund or to create a tax refund when you wouldn't have already had one. In other words, your savings cannot exceed the amount of tax you owe.

With that being said, the amount of refund is effected by the credit.  Your refund would not be affected if the credit reduced your taxes to $0. 

For example, if your taxes on the return is $1,000 but your credit is $2,000 then you would only be allowed $1,000 credit and the other $1,000 would be non-refundable.  So, your taxes must be more than $2,000 without the credit.

TurboTax translates this information accurately most time.  I suggest entering the credit then run the error check.  If you pass the error check then you are okay.