#Good news! The IRS has extended the tax deadline to April 18th! As long as you submit your federal return by midnight on 4/18/2018, you won't be considered a late filer for your federal return. Direct debit tax payments that are submitted with your federal return (or on the IRS website) by 4/18 are also considered timely filed ×

What's the difference between the Mortgage Interest Credit and the Home Mortgage Interest Deduction?

The Mortgage Interest Credit and the Home Mortgage Interest Deduction are tax breaks tied to the purchase of a primary residence through use of a mortgage. However, since one is a credit and the other a deduction, they work in fundamentally different ways.

Tax deductions reduce the amount of your income that is subject to tax. You take deductions before calculating the amount of tax you owe.

Tax credits reduce the amount of tax you owe. You subtract them, dollar-for-dollar, from the tax you owe. Credits can either be refundable (meaning you get a refund, even if it’s more than you owe) or non-refundable (you get a refund only up to the amount you owe).

The Home Mortgage Interest Deduction is generally available to any homebuyer, regardless of income, as long as they meet the qualification requirements, including filing a Form 1040 and itemizing deductions on Schedule A and the loan is a secured debt on a qualified home in which you have an ownership interest.

The Mortgage Interest Credit is intended to help lower-income people afford home ownership. If your state or local government issued you a qualified Mortgage Credit Certificate (MCC) when you took out your mortgage to purchase your main home, you may qualify for the Mortgage Interest Credit.

If you qualify, you may be able to claim both the Home Mortgage Interest Deduction and the Mortgage Interest Credit, but you will have to reduce the amount of your deduction by the amount of the credit.

Credit Karma Tax can help you understand which of these tax breaks you might qualify for, and assist you in completing the necessary tax forms.

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