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IRS.gov Website
Publication 17
taxmap/pub17/p17-186.htm#en_us_publink1000174891

Chapter 37
Other Credits(p247)

What's New(p247)


taxmap/pub17/p17-186.htm#en_us_publink1000250489

Government retiree credit.(p247)

This credit has expired. It is not available for 2010.
taxmap/pub17/p17-186.htm#en_us_publink1000174893

Adoption credit.(p247)

The maximum adoption credit increases to $13,170. This credit is now refundable. Also, new documentation requirements apply. See Adoption Credit for more information.
taxmap/pub17/p17-186.htm#en_us_publink1000250490

First-time homebuyer credit.(p247)

You generally cannot claim the credit for a home you bought after April 30, 2010. However, you may be able to claim the credit if you entered into a written binding contract before May 1, 2010, to buy the home before July 1, 2010, and actually bought the home before October 1, 2010. Also, certain members of the Armed Forces and certain other taxpayers have additional time to buy a home and take the credit. See First-Time Homebuyer Credit.
taxmap/pub17/p17-186.htm#en_us_publink1000250491

Recapture of first-time homebuyer credit.(p247)

If you claimed the first-time homebuyer credit for a home you bought in 2008, you generally must begin repaying it on your 2010 return. In addition, you generally must repay any credit you claimed for 2008 or 2009 if you sold your home in 2010 or the home stopped being your main home in 2010. See First-Time Homebuyer Credit.
taxmap/pub17/p17-186.htm#TXMP79cbf57f
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/p17-186.htm#en_us_publink1000174903

Nonrefundable credits.(p247)

rule
The first part of this chapter, Nonrefundable Credits, covers ten 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/p17-186.htm#en_us_publink1000174904

Refundable credits.(p247)

rule
The second part of this chapter, Refundable Credits, covers seven 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/p17-186.htm#TXMP17cb5524

Useful items

You may want to see:


Publication
 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit)
 514 Foreign Tax Credit for  
Individuals

 530 Tax Information for Homeowners
 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 and Repayment of the Credit
 5695: Residential Energy Credits
 8396: Mortgage Interest Credit
 8801: Credit For Prior Year Minimum Tax — Individuals, Estates, and Trusts
 8828: Recapture of Federal Mortgage Subsidy
 8834: Qualified Plug-in Electric and Electric Vehicle Credit
 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
 8936: Qualified Plug-in Electric Drive Motor Vehicle Credit
taxmap/pub17/p17-186.htm#en_us_publink1000174905

Nonrefundable Credits(p247)

rule
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/p17-186.htm#en_us_publink1000174914

Alternative Motor Vehicle Credit(p247)

rule
You may be able to take a credit if you place an alternative motor vehicle in service in 2010.
taxmap/pub17/p17-186.htm#en_us_publink1000174915

Alternative motor vehicle.(p247)

rule
An alternative motor vehicle is a new vehicle that qualifies as one of the following four types of vehicles. A credit is also allowed for the cost of converting a vehicle to a qualified plug-in electric drive vehicle.
EIC
At the time this publication went to print, Congress was considering legislation that would extend this credit to certain qualified hybrid vehicles weighing more than 8,500 pounds. To find out if this legislation was enacted, and for more details, go to www.irs.gov/formspubs.
taxmap/pub17/p17-186.htm#en_us_publink1000174916

Amount of credit.(p247)

rule
Generally, 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 amount of the credit for which it qualifies.
Ordinarily the amount of the credit is 100% of the manufacturer's (or domestic distributor's) certification of the maximum credit allowable. However, the credit for converting a vehicle to a qualified plug-in electric drive vehicle is the smaller of (a) $4,000, or (b) 10% of the cost of the conversion.
If you purchased a qualified hybrid vehicle weighing 8,500 pounds or less or an 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 reduced credit. Also see the Form 8910 instructions.
EIC
See the Form 8910 instructions for a list of vehicles for which the credit is reduced or not allowed.
taxmap/pub17/p17-186.htm#en_us_publink1000174921

How to take the credit.(p247)

rule
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 53. Check box c and enter "8910" on the line next to that box.
taxmap/pub17/p17-186.htm#en_us_publink1000174922

More information.(p248)

rule
For more information on the credit, see the instructions for Form 8910.
taxmap/pub17/p17-186.htm#en_us_publink1000174923

Alternative Fuel Vehicle Refueling Property Credit(p248)

rule
You may be able to take a credit if you place qualified alternative fuel vehicle refueling property in service in 2010.
taxmap/pub17/p17-186.htm#en_us_publink1000174924

Qualified alternative fuel vehicle refueling property.(p248)

rule
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.
The following are alternative fuels.
taxmap/pub17/p17-186.htm#en_us_publink1000174926

Amount of the credit.(p248)

rule
For personal use property, the credit is generally the smaller of 50% of the property's cost or $2,000. For business use property, the credit is generally the smaller of 50% of the property's cost or $50,000. The amounts are different for hydrogen refueling property.
taxmap/pub17/p17-186.htm#en_us_publink1000174927

How to take the credit.(p248)

rule
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 53. Check box c and enter "8911" on the line next to that box.
taxmap/pub17/p17-186.htm#en_us_publink1000174928

More information.(p248)

rule
For more information on the credit, see the instructions for Form 8911.
taxmap/pub17/p17-186.htm#en_us_publink1000174929

Credit to Holders of Tax Credit Bonds(p248)

rule
Tax credit bonds are bonds in which the holder receives a tax credit in lieu of some or all of the interest on the bond.
You may be able to take a credit if you are a holder of one of the following bonds.
In some instances, an issuer may elect to receive a credit for interest paid on the bond. If the issuer makes this election, you cannot also claim a credit.
taxmap/pub17/p17-186.htm#en_us_publink1000174930

Interest income.(p248)

rule
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/p17-186.htm#en_us_publink1000174931

How to take the credit.(p248)

rule
Complete Form 8912 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 53. Check box c, and enter "8912" on the line next to that box.
taxmap/pub17/p17-186.htm#en_us_publink1000174932

More information.(p248)

rule
For more information, see the instructions for Form 8912.
taxmap/pub17/p17-186.htm#en_us_publink1000174933

Foreign Tax Credit(p248)

rule
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/p17-186.htm#en_us_publink1000174935

Limit on the credit.(p248)

rule
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/p17-186.htm#en_us_publink1000174937

How to take the credit.(p248)

rule
Complete Form 1116 and attach it to your Form 1040. Enter the credit on Form 1040, line 47.
taxmap/pub17/p17-186.htm#en_us_publink1000174938
Exception.(p248)
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/p17-186.htm#en_us_publink1000174939

Mortgage Interest Credit(p248)

rule
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/p17-186.htm#en_us_publink1000174940

Who qualifies.(p248)

rule
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/p17-186.htm#en_us_publink1000174941

Amount of credit.(p248)

rule
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/p17-186.htm#en_us_publink1000174943

Limit based on credit rate.(p248)

rule
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/p17-186.htm#en_us_publink1000174944

Carryforward.(p248)

rule
Your credit (after applying the limit based on the 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/p17-186.htm#en_us_publink1000174945

How to take the credit.(p248)

rule
Figure your 2010 credit and any carryforward to 2011 on Form 8396, and attach it to your Form 1040. Be sure to include any credit carryforward from 2007, 2008, and 2009.
Include the credit in your total for Form 1040, line 53. Check box c on that line and enter "8396" in the space next to that box.
taxmap/pub17/p17-186.htm#en_us_publink1000174946

Reduced home mortgage interest deduction.(p248)

rule
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 2011. For more information about the home mortgage interest deduction, see chapter 23.
taxmap/pub17/p17-186.htm#en_us_publink1000174948

Recapture of federal mortgage subsidy.(p248)

rule
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 chapter 15 for more information.
taxmap/pub17/p17-186.htm#en_us_publink1000174949

Nonrefundable Credit for Prior Year Minimum Tax(p248)

rule
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 2009 you had:
taxmap/pub17/p17-186.htm#en_us_publink1000174950

Refundable credit.(p249)

rule
If you had a minimum tax credit carryforward to 2008 (on your 2007 Form 8801, line 28), you may qualify for a refund of that credit amount. For more information, see Refundable Credit for Prior Year Minimum Tax, later.
taxmap/pub17/p17-186.htm#en_us_publink1000174952

How to take the credit.(p249)

rule
Figure your 2010 nonrefundable credit (if any), and any carryforward to 2011 on Form 8801, and attach it to your Form 1040. Include the credit in your total for Form 1040, line 53, 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/p17-186.htm#en_us_publink1000174953

More information.(p249)

rule
For more information about the credit, see the instructions for Form 8801.
taxmap/pub17/p17-186.htm#en_us_publink1000210768

Plug-in Electric Drive Motor Vehicle Credit(p249)

rule
You may be able to take this credit if you placed in service for business or personal use a qualified plug-in electric drive motor vehicle in 2010.
Generally, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification that a vehicle qualifies for the credit.
taxmap/pub17/p17-186.htm#en_us_publink1000210769

Amount of credit.(p249)

rule
The amount of the credit varies depending on the battery capacity and ranges from $2,500 to $7,500 per vehicle.
taxmap/pub17/p17-186.htm#en_us_publink1000210770

Qualified vehicle.(p249)

rule
A qualified plug-in electric drive motor vehicle is a motor vehicle the original use of which starts with you and that:
  1. Has at least four wheels,
  2. Is acquired for your use or lease and not for resale,
  3. Is made by a manufacturer,
  4. Is manufactured primarily for use on public streets, roads, and highways,
  5. Has a gross vehicle weight rating of less than 14,000 pounds,
  6. Is a motor vehicle for purposes of the Clean Air Act, and
  7. Is propelled to a significant extent by an electric motor that draws electricity from a battery that:
    1. Has a capacity of at least 4 kilowatt hours, and
    2. Is capable of being recharged from an external source of electricity.
taxmap/pub17/p17-186.htm#en_us_publink1000210771

How to take the credit.(p249)

rule
To take the credit, you must complete Form 8936 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 53. Check box c and enter "8936" on the line next to that box.
taxmap/pub17/p17-186.htm#en_us_publink1000210772

Plug-in Electric Vehicle Credit(p249)

rule
You may be able to take this credit if you acquired a qualified plug-in electric vehicle in 2010. For this credit, the vehicle can have 2, 3, or 4 wheels. A vehicle with 4 wheels must be a low speed vehicle.
Generally, you can rely on the manufacturer's (or, in the case of a foreign manufacturer, its domestic distributor's) certification that a vehicle qualifies for the credit.
taxmap/pub17/p17-186.htm#en_us_publink1000210773

Amount of credit.(p249)

rule
The credit is 10% of the cost of the vehicle, limited to $2,500 per vehicle.
taxmap/pub17/p17-186.htm#en_us_publink1000210774

Qualified vehicle.(p249)

rule
A qualified plug-in electric vehicle is a motor vehicle the original use of which starts with you and that:
  1. Is acquired for your use or lease and not for resale,
  2. Is made by a manufacturer,
  3. Is manufactured primarily for use on public streets, roads, and highways,
  4. Has a gross vehicle weight rating of less than 3,000 pounds if it has 4 wheels and less than 14,000 pounds if it has 2 or 3 wheels,
  5. Is a low speed vehicle if it has 4 wheels, and
  6. Is propelled to a significant extent by an electric motor that draws electricity from a battery that:
    1. Has a capacity of at least 4 kilowatt hours (2.5 kilowatt hours in the case of a vehicle with 2 or 3 wheels), and
    2. Is capable of being recharged from an external source of electricity.
taxmap/pub17/p17-186.htm#en_us_publink1000210775

How to take the credit.(p249)

rule
To take the credit, you must complete Form 8834 and attach it to your Form 1040. Include the credit in your total for Form 1040, line 53. Check box c and enter "8834" on the line next to that box.
taxmap/pub17/p17-186.htm#en_us_publink1000174954

Residential Energy Credits(p249)

rule
You may be able to take one or both of the following credits if you made energy saving improvements to your home located in the United States in 2010.
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 the association or corporation for purposes of these credits.
taxmap/pub17/p17-186.htm#en_us_publink1000209300

Nonbusiness energy property credit.(p249)

rule
You may be able to take a credit of 30% of the costs paid or incurred in 2010 for any qualified energy efficiency improvements and any residential energy property.
The credit is limited to a total of $1,500 over 2009 and 2010.
Qualified energy efficiency improvements are the following improvements that are new, can be expected to remain in use at least 5 years, and meet certain requirements for energy efficiency.
Residential energy property is any of the following.
taxmap/pub17/p17-186.htm#en_us_publink1000209301

Residential energy efficient property credit.(p249)

rule
You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, fuel cell property, small wind energy property, and geothermal heat pump property. The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property.
taxmap/pub17/p17-186.htm#en_us_publink1000174957

Basis reduction.(p249)

rule
You must reduce the basis of your home by the amount of any credit allowed.
taxmap/pub17/p17-186.htm#en_us_publink1000174958

How to take the credit.(p249)

rule
Complete Form 5695 and attach it to your Form 1040. Enter the credit on Form 1040, line 52.
taxmap/pub17/p17-186.htm#en_us_publink1000174959

More information.(p249)

rule
For more information on this credit, see the instructions for Form 5695.
taxmap/pub17/p17-186.htm#en_us_publink1000174960

Retirement Savings Contributions Credit (Saver's Credit)(p249)

rule
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 $27,750 ($41,625 if head of household; $55,500 if married filing jointly).
  2. The person(s) who made the qualified contribution or elective deferral (a) was born after January 1, 1993, (b) is claimed as a dependent on someone else's 2010 tax return, or (c) was a student (defined next).
taxmap/pub17/p17-186.htm#en_us_publink1000174961

Student.(p250)

rule
You were a student if during any part of 5 calendar months of 2010 you:
taxmap/pub17/p17-186.htm#en_us_publink1000174962
School.(p250)
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/p17-186.htm#en_us_publink1000174963

How to take the credit.(p250)

rule
Figure the credit on Form 8880. Enter the credit on your Form 1040, line 50, or your Form 1040A, line 32, and attach Form 8880 to your return.