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previous page Previous Page: Publication 17 - Your Federal Income Tax - Advance Earned Income Credit
next page Next Page: Publication 17 - Your Federal Income Tax - Refundable Credits
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication
taxmap/pub17/p17-193.htm#en_us_publink100035211

Chapter 37
Other Credits(p252)

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What's New(p252)


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taxmap/pub17/p17-193.htm#en_us_publink100035213

Adoption credit.(p252)

The maximum adoption credit increases to $11,650. See Adoption Credit for more information.
taxmap/pub17/p17-193.htm#en_us_publink100023502

Recovery rebate credit.(p252)

This credit is figured like the economic stimulus payment except that your 2008 tax information is used to figure the credit, instead of your 2007 tax information. The maximum credit is $600 ($1,200 if married filing jointly) plus $300 for each qualifying child. The credit is reduced by any economic stimulus payment you received. See Recovery Rebate Credit for more information.
taxmap/pub17/p17-193.htm#en_us_publink100049555

First-time homebuyer credit.(p252)

You may be able to claim a credit of up to $7,500 if you are a first-time homebuyer and your modified adjusted gross income is less than $95,000 ($170,000 if married filing jointly). This credit is like a loan to you. You must recapture the amount of your 2008 credit in 15 equal yearly installments starting in 2010 (2 years after claiming the credit). See First-Time Homebuyer Credit for more information.
taxmap/pub17/p17-193.htm#en_us_publink100023503

Nonbusiness energy property credit not allowed for 2008.(p252)

You cannot claim the nonbusiness energy property credit for property placed in service in 2008. However, you may be able to claim it next year for property placed in service in 2009. Also, you still may be able to claim the residential energy efficient property credit for 2008. See Residential Energy Efficient Property Credit for more information.
taxmap/pub17/p17-193.htm#en_us_publink100035215

Excess withholding of social security tax and railroad retirement tax.(p252)

Social security tax and tier 1 railroad retirement (RRTA) tax are both withheld at a rate of 6.2% of wages. The maximum wages subject to these taxes increased to $102,000 in 2008. The withholding rate of tier 2 RRTA is 3.9% of wages in 2008. The maximum wages subject to this tax increased to $75,900 in 2008. If you had too much social security or RRTA tax withheld during 2008, you may be entitled to a credit of the excess withholding. For more information about the credit, see Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld under Refundable Credits, later.
taxmap/pub17/p17-193.htm#TXMP55d5a39f
This chapter discusses the following nonrefundable credits.
This chapter also discusses the following refundable credits.
Several other credits are discussed in other chapters in this publication.
taxmap/pub17/p17-193.htm#en_us_publink100035217

Nonrefundable credits.(p252)


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The first part of this chapter, Nonrefundable Credits, covers nine credits that you subtract from your tax. These credits may reduce your tax to zero. If these credits are more than your tax, the excess is not refunded to you.
taxmap/pub17/p17-193.htm#en_us_publink100035218

Refundable credits.(p252)


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The second part of this chapter, Refundable Credits, covers six credits that are treated as payments and are refundable to you. These credits are added to the federal income tax withheld and any estimated tax payments you made. If this total is more than your total tax, the excess will be refunded to you.

taxmap/pub17/p17-193.htm#TXMP3c2a29a3

Useful items

You may want to see:


Publication
 502 Medical and Dental Expenses
 514 Foreign Tax Credit for  
Individuals

 530 Tax Information for First-Time Homeowners
 535 Business Expenses
 590 Individual Retirement Arrangements (IRAs)
Form (and Instructions)
 1116: Foreign Tax Credit (Individual, Estate, or Trust)
 2439: Notice to Shareholder of Undistributed Long-Term Capital Gains
 5405: First-Time Homebuyer Credit
 5695: Residential Energy Efficient Property Credit
 8396: Mortgage Interest Credit
 8801: Credit For Prior Year Minimum Tax — Individuals, Estates, and Trusts
 8828: Recapture of Federal Mortgage Subsidy
 8839: Qualified Adoption Expenses
 8880: Credit for Qualified Retirement Savings Contributions
 8885: Health Coverage Tax Credit
 8910: Alternative Motor Vehicle Credit
 8911: Alternative Fuel Vehicle Refueling Property Credit
 8912: Credit to Holders of Tax Credit Bonds
taxmap/pub17/p17-193.htm#en_us_publink100035219

Nonrefundable Credits(p252)


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The credits discussed in this part of the chapter can reduce your tax. However, if the total of these credits is more than your tax, the excess is not refunded to you.
taxmap/pub17/p17-193.htm#en_us_publink100035220

Adoption Credit(p252)


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previous topic occurrence Adoption next topic occurrence

You may be able to take a tax credit of up to $11,650 for qualified expenses paid to adopt an eligible child. The credit may be allowed for the adoption of a child with special needs even if you do not have any qualified expenses.
If your modified adjusted gross income (AGI) is more than $174,730, your credit is reduced. If your modified AGI is $214,730 or more, you cannot take the credit.
taxmap/pub17/p17-193.htm#en_us_publink100035221

Qualified adoption expenses.(p252)


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Qualified adoption expenses.

Qualified adoption expenses are reasonable and necessary expenses directly related to, and whose principal purpose is for, the legal adoption of an eligible child. These expenses include: .
taxmap/pub17/p17-193.htm#en_us_publink100035222

Nonqualified expenses.(p252)
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Qualified adoption expenses do not include expenses:
taxmap/pub17/p17-193.htm#en_us_publink100035223

Eligible child.(p253)


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Eligible child

The term "eligible child" means any individual:
taxmap/pub17/p17-193.htm#en_us_publink100035224

Child with special needs.(p253)
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An eligible child is a child with special needs if all three of the following apply.
  1. The child was a citizen or resident of the United States (including U.S. possessions) at the time the adoption process began.
  2. A state (including the District of Columbia) has determined that the child cannot or should not be returned to his or her parents' home.
  3. The state has determined that the child will not be adopted unless assistance is provided to the adoptive parents. Factors used by states to make this determination include:
    1. The child's ethnic background,
    2. The child's age,
    3. Whether the child is a member of a minority or sibling group, and
    4. Whether the child has a medical condition or a physical, mental, or emotional handicap.
taxmap/pub17/p17-193.htm#en_us_publink100035225

When to take the credit.(p253)


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Generally, until the adoption becomes final, you take the credit in the year after your qualified expenses were paid or incurred. If the adoption becomes final, you take the credit in the year your expenses were paid or incurred. See the instructions for Form 8839 for more specific information on when to take the credit.
taxmap/pub17/p17-193.htm#en_us_publink100035226

Foreign child.(p253)
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If the child is not a U.S. citizen or resident at the time the adoption process began, you cannot take the credit unless the adoption becomes final. You treat all adoption expenses paid or incurred in years before the adoption becomes final as paid or incurred in the year it becomes final.
taxmap/pub17/p17-193.htm#en_us_publink100035227

How to take the credit.(p253)


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To take the credit, you must complete Form 8839 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 53, and check box b on that line.
taxmap/pub17/p17-193.htm#en_us_publink100035228

Alternative Motor Vehicle Credit(p253)


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Alternative Motor Vehicle Credit

You may be able to take a credit if you place an alternative motor vehicle in service in 2008.
taxmap/pub17/p17-193.htm#en_us_publink100035229

Alternative motor vehicle.(p253)


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Alternative motor vehicle.

An alternative motor vehicle is a new vehicle that qualifies as one of the following four types of vehicles.
taxmap/pub17/p17-193.htm#en_us_publink100035230

Amount of credit.(p253)


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Generally, for a qualified alternative fuel vehicle, an advanced lean burn technology vehicle, or a qualified hybrid vehicle, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification that a specific make, model, and model year vehicle qualifies for the credit and the maximum amount of the credit for which it qualifies. For an updated list of certified vehicles and the specific credit amounts for each model, go to www.irs.gov/newsroom/article/0,,id=157557,00.html on the Internet.
taxmap/pub17/p17-193.htm#en_us_publink100035231

Additional requirements.(p253)
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In addition to the manufacturer's (or domestic distributor's) certification, the following requirements must be met to qualify for the credit:
taxmap/pub17/p17-193.htm#en_us_publink100035232

Phaseout of credit.(p253)


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Phaseout of credit.

Ordinarily the amount of the credit is 100% of the manufacturer's (or domestic distributor's) certification of the maximum credit allowable as explained above. However, if you purchased a qualified hybrid or advanced lean burn technology vehicle from a manufacturer who previously sold at least 60,000 of these vehicles, the amount of your credit may be reduced. Your manufacturer should give you the information you need to figure your phaseout percentage. Also see the Form 8910 instructions.
EIC
For Toyota and Lexus vehicles, no credit is allowed for 2008. For certain other vehicles the credit is reduced. See the Form 8910 instructions or Summary of the Credit for Qualified Hybrid Vehicles, on the Internet at www.irs.gov/newsroom/article/0,,id=157557,00.html.
taxmap/pub17/p17-193.htm#en_us_publink100035234

Recapture of credit.(p253)


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If the vehicle no longer qualifies for the credit, you may have to recapture part or all of the credit.
taxmap/pub17/p17-193.htm#en_us_publink100035235

How to take the credit.(p253)


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To take the credit, you must complete Form 8910 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 54. Check box c and enter "8910" on the line next to box c.
taxmap/pub17/p17-193.htm#en_us_publink100035236

More information.(p253)


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For more information on the credit, see the instructions for Form 8910.
taxmap/pub17/p17-193.htm#en_us_publink100035237

Alternative Fuel Vehicle Refueling Property Credit(p253)


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Alternative Fuel Vehicle Refueling Property Credit

You may be able to take a credit if you place qualified alternative fuel vehicle refueling property in service in 2008.
taxmap/pub17/p17-193.htm#en_us_publink100035238

Qualified alternative fuel vehicle refueling property.(p253)


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Qualified alternative fuel vehicle refueling property.

Qualified alternative fuel vehicle refueling property is any property (other than a building or its structural components) used to store or dispense alternative fuel into the fuel tank of a motor vehicle propelled by the fuel, but only if the storage or dispensing is at the point where the fuel is delivered into the tank.
taxmap/pub17/p17-193.htm#en_us_publink100079700

Electricity.(p253)
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Electric vehicle recharging property placed in service after October 3, 2008, is eligible for the credit. See the Form 8911 instructions for details and other property eligible for the credit.
taxmap/pub17/p17-193.htm#en_us_publink100035239

Amount of the credit.(p253)


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For personal use property, the credit is generally the smaller of 30% of the property's cost or $1,000. For business use property, the credit is generally the smaller of 30% of the property's cost or $30,000. Each property's cost must first be reduced by any section 179 deduction before figuring the credit.
taxmap/pub17/p17-193.htm#en_us_publink100035240

How to take the credit.(p253)


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To take the credit, you must complete Form 8911 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 54. Check box c and enter "8911" on the line next to box c.
taxmap/pub17/p17-193.htm#en_us_publink100035241

More information.(p253)


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For more information on the credit, see the instructions for Form 8911.
taxmap/pub17/p17-193.htm#en_us_publink100035242

Credit to Holders of Tax Credit Bonds(p253)


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Credit to Holders of Tax Credit Bonds

You may be able to take a credit if you are a holder of a tax credit bond. Tax credit bonds include:
The issuers do not pay interest on these types of bonds. Instead of receiving interest, the bondholders qualify to claim a tax credit.
taxmap/pub17/p17-193.htm#en_us_publink100035245

Interest income.(p253)


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The amount of any tax credit allowed (figured before applying tax liability limits) must be included as interest income on your tax return.
taxmap/pub17/p17-193.htm#en_us_publink100035246

How to take the credit.(p253)


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Complete Form 8912 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 54. Check box c, and enter "8912" on the line next to box c.
taxmap/pub17/p17-193.htm#en_us_publink100035247

More information.(p253)


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For more information, see the instructions for Form 8912.
taxmap/pub17/p17-193.htm#en_us_publink100035248

Foreign Tax Credit(p253)


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previous topic occurrence Foreign Tax Credit next topic occurrence

You generally can choose to take income taxes you paid or accrued during the year to a foreign country or U.S. possession as a credit against your U.S. income tax. Or, you can deduct them as an itemized deduction (see chapter 22).
You cannot take a credit (or deduction) for foreign income taxes paid on income that you exclude from U.S. tax under any of the following.
  1. Foreign earned income exclusion.
  2. Foreign housing exclusion.
  3. Income from Puerto Rico exempt from U.S. tax.
  4. Possession exclusion.
taxmap/pub17/p17-193.htm#en_us_publink100035249

Limit on the credit.(p253)


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Limit on the credit.

Unless you can elect not to file Form 1116 (see Exception, later), your foreign tax credit cannot be more than your U.S. tax liability (Form 1040, line 44), multiplied by a fraction. The numerator of the fraction is your taxable income from sources outside the United States. The denominator is your total taxable income from U.S. and foreign sources. See Publication 514 for more information.
taxmap/pub17/p17-193.htm#en_us_publink100035250

How to take the credit.(p254)


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Complete Form 1116 and attach it to your Form 1040. Enter the credit on Form 1040, line 50.
taxmap/pub17/p17-193.htm#en_us_publink100035251

Exception.(p254)
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You do not have to complete Form 1116 to take the credit if all of the following apply.
For more details on these requirements, see the instructions for Form 1116.
taxmap/pub17/p17-193.htm#en_us_publink100035252

Mortgage Interest Credit(p254)


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The mortgage interest credit is intended to help lower-income individuals own a home. If you qualify, you can take the credit each year for part of the home mortgage interest you pay.
taxmap/pub17/p17-193.htm#en_us_publink100035253

Who qualifies.(p254)


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Who qualifies.

You may be eligible for the credit if you were issued a qualified mortgage credit certificate (MCC) from your state or local government. Generally, an MCC is issued only in connection with a new mortgage for the purchase of your main home.
taxmap/pub17/p17-193.htm#en_us_publink100035254

Amount of credit.(p254)


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Figure your credit on Form 8396. If your mortgage loan amount is equal to (or smaller than) the certified indebtedness (loan) amount shown on your MCC, enter on Form 8396, line 1, all the interest you paid on your mortgage during the year.
If your mortgage loan amount is larger than the certified indebtedness amount shown on your MCC, you can figure the credit on only part of the interest you paid. To find the amount to enter on line 1, multiply the total interest you paid during the year on your mortgage by the following fraction.
 Certified indebtedness amount on your MCC 
 Original amount of your mortgage 
taxmap/pub17/p17-193.htm#en_us_publink100035255

Limit based on credit rate.(p254)


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Limit based on credit rate.

If the certificate credit rate is more than 20%, the credit you are allowed cannot be more than $2,000. If two or more persons (other than a married couple filing a joint return) hold an interest in the home to which the MCC relates, this $2,000 limit must be divided based on the interest held by each person. See Publication 530 for more information.
taxmap/pub17/p17-193.htm#en_us_publink100035256

Carryforward.(p254)


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Your credit (after applying the limit based on credit rate) is also subject to a limit based on your tax that is figured using Form 8396. If your allowable credit is reduced because of this tax liability limit, you can carry forward the unused portion of the credit to the next 3 years or until used, whichever comes first.
If you are subject to the $2,000 limit because your certificate credit rate is more than 20%, you cannot carry forward any amount more than $2,000 (or your share of the $2,000 if you must divide the credit).
taxmap/pub17/p17-193.htm#en_us_publink100035257

How to take the credit.(p254)


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Figure your 2008 credit and any carryforward to 2009 on Form 8396, and attach it to your Form 1040. Be sure to include any credit carryforward from 2005, 2006, and 2007.
Include the credit in your total for Form 1040, line 53, and check box a.
taxmap/pub17/p17-193.htm#en_us_publink100035258

Reduced home mortgage interest deduction.(p254)


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previous topic occurrence Reduced home mortgage interest deduction. next topic occurrence

If you itemize your deductions on Schedule A (Form 1040), you must reduce your home mortgage interest deduction by the amount of the mortgage interest credit shown on Form 8396, line 3. You must do this even if part of that amount is to be carried forward to 2009. For more information about the home mortgage interest deduction, see chapter 23.
taxmap/pub17/p17-193.htm#en_us_publink100035259

Recapture of federal mortgage subsidy.(p254)


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previous topic occurrence Recapture of Federal Mortgage Subsidy next topic occurrence

If you received an MCC with your mortgage loan, you may have to recapture (pay back) all or part of the benefit you received from that program. The recapture may be required if you sell or dispose of your home at a gain during the first 9 years after the date you closed your mortgage loan. See Publication 523, Selling Your Home, for more information.
taxmap/pub17/p17-193.htm#en_us_publink100035260

Nonrefundable Credit for Prior Year Minimum Tax(p254)


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Nonrefundable Credit for Prior Year Minimum Tax

The tax laws give special treatment to some kinds of income and allow special deductions and credits for some kinds of expenses. If you benefit from these laws, you may have to pay at least a minimum amount of tax in addition to any other tax on these items. This is called the alternative minimum tax.
The special treatment of some items of income and expenses only allows you to postpone paying tax until a later year. If in prior years you paid alternative minimum tax because of these tax postponement items, you may be able to take a credit for prior year minimum tax against your current year's regular tax.
You may be able to take a credit against your regular tax if for 2007 you had:
taxmap/pub17/p17-193.htm#en_us_publink100035261

Refundable credit.(p254)


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If you have any unused minimum tax credit carryforward from 2005 or earlier years, you may qualify for a refund of that credit amount. For more information, see Refundable Credit for Prior Year Minimum Tax, later.
taxmap/pub17/p17-193.htm#en_us_publink100035262

How to take the credit.(p254)


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Figure your 2008 nonrefundable credit (if any), and any carryforward to 2009 on Form 8801, and attach it to your Form 1040. Include the credit in your total for Form 1040, line 54, and check box b. You can carry forward any unused credit for prior year minimum tax to later years until it is completely used.
taxmap/pub17/p17-193.htm#en_us_publink100035263

More information.(p254)


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For more information about the credit, see the instructions for Form 8801.
taxmap/pub17/p17-193.htm#en_us_publink100035264

Residential Energy Efficient Property Credit(p254)


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Residential Energy Efficient Property Credit

You may be able to take this credit if you made energy saving improvements to your home located in the United States in 2008.
taxmap/pub17/p17-193.htm#en_us_publink100023504

Home.(p254)


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Home

A home is where you lived in 2008 and may include a house, houseboat, mobile home, cooperative apartment, condominium, and a manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards.
If you are a member of a condominium management association for a condominium you own or a tenant-stockholder in a cooperative housing corporation, you are treated as having paid your proportionate share of any costs of such association or corporation for purposes of this credit.
taxmap/pub17/p17-193.htm#en_us_publink100096403

Amount of credit.(p254)


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The credit is 30% of your costs of qualified:
This includes labor costs properly allocable to the onsite preparation, assembly, or original installation of the property to the home. The credit is limited to:
taxmap/pub17/p17-193.htm#en_us_publink100035268

Basis reduction.(p254)


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You must reduce the basis of your home by the amount of any credit allowed.
taxmap/pub17/p17-193.htm#en_us_publink100035269

How to take the credit(p254)


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Complete Form 5695 and attach it to your Form 1040. Enter the credit on Form 1040, line 53, and check box c.
taxmap/pub17/p17-193.htm#en_us_publink100035270

More information.(p254)


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For more information on this credit, see the instructions for Form 5695.
taxmap/pub17/p17-193.htm#en_us_publink100035271

Retirement Savings Contributions Credit(p255)


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You may be able to take this credit if you, or your spouse if filing jointly, made:
However, you cannot take the credit if either of the following applies.
  1. The amount on Form 1040, line 38, or Form 1040A, line 22, is more than $26,500 ($39,750 if head of household; $53,000 if married filing jointly).
  2. The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1991, (b) is claimed as a dependent on someone else's 2008 tax return, or (c) was a student (defined next).
taxmap/pub17/p17-193.htm#en_us_publink100035272

Student.(p255)


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previous topic occurrence Student next topic occurrence

You were a student if during any part of 5 calendar months of 2008 you:
taxmap/pub17/p17-193.htm#en_us_publink100035273

School.(p255)
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A school includes a technical, trade, or mechanical school. It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet.
taxmap/pub17/p17-193.htm#en_us_publink100035274

How to take the credit.(p255)


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Figure the credit on Form 8880. Enter the credit on your Form 1040, line 51, or your Form 1040A, line 32, and attach Form 8880 to your return.
previous pagePrevious Page: Publication 17 - Your Federal Income Tax - Advance Earned Income Credit
next pageNext Page: Publication 17 - Your Federal Income Tax - Refundable Credits
 Use previous pagenext page to find additional occurrences of topic items.Index for this Publication