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Part 21. Customer Account Services

Chapter 6. Individual Tax Returns

Section 3. Credits

21.6.3  Credits

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21.6.3.1  (10-01-2002)
Credits Overview

  1. This section provides information on both non-refundable and refundable credits.

21.6.3.2  (10-01-2002)
What Are Credits?

  1. A Non-Refundable Credit is a statutory credit. Non-refundable credits are offset against, and limited to, the amount of the tax liability for the tax year.

    Reminder:

    The unused amounts of adoption, mortgage interest, and District of Columbia first time home buyer's credits, etc. can be carried over from year to year until the credits are absorbed, or the carryforward period expires, whichever is first.

  2. A Refundable Credit, is a credit that can reduce tax liability below zero. Examples of refundable credits are the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit. If the credit(s) exceed the total tax liability, the excess is refundable.

21.6.3.3  (10-01-2002)
Credits Research

  1. Credits are researched on Integrated Data Retrieval System (IDRS), using Command Codes (CC) RTVUE, IMFOLT, or TXMODA.

  2. The tax code permits a wide variety of credits. Follow the procedures below for non-refundable and refundable credits.

21.6.3.4  (10-01-2009)
Credits Procedures

  1. This section contains the procedures for non-refundable and refundable tax credits.

  2. All credits require the primary taxpayer, secondary taxpayer, and, if applicable, the qualifying child(ren) have a valid Taxpayer Identification Number (TIN). See Exhibit 21.6.3-1, TIN REQUIREMENTS FOR EXEMPTIONS AND CREDITS.

    Note:

    An Internal Revenue Service Number (IRSN) is not a valid TIN for credit allowance.

  3. Certain credits, e.g., Child Tax Credit and Earned Income Tax Credit, contain age criteria that must be met for credit allowance.

    1. On January 1, 2001, IRS established a date of birth/death database. The database consists of the taxpayer's date of birth (DOB) and date of death information (DOD) as shown on Social Security Administration (SSA) records.

    2. Use Command Code (CC) DTVUE to research IRS and SSA date of birth and date of death information. Use the Real Time System (RTS) to verify the DOB when an ITIN is involved. See IRM 3.21.263 ,IRS Individual Taxpayer Identification Number (ITIN) Real Time System (RTS).

    3. If a taxpayer contacts IRS as a result of a math error notice, inform the taxpayer that his/her return does not agree with SSA records. The taxpayer should contact his/her local SSA office.

    4. To substantiate date of birth for tax purposes, taxpayer must provide documentation, e.g. , birth certificate, school records, baptism records, etc., for verification.

    5. When the taxpayer provides the appropriate documentation, use CC DM1DT to add, change, or delete data to correct the date of birth. See IRM 2.3.25, Command Codes DM1DT and DTVUE, for CC input.

      Exception:

      Do not use CC DM1DT to update Individual Taxpayer Identification Number (ITIN) information. Complete a Form 4442, Inquiry Referral, and fax it along with the taxpayer documentation to the Austin Service Center (AUSC) ITIN unit at ≡ ≡ ≡ ≡ ≡ ≡ .

  4. On 8/18/03, the Internal Revenue Service published Rev. Rul. 2003-72, which applies a uniform method of determining when a child attains a specific age for certain tax purposes. For ALL tax years, taxpayer inquiries or claims regarding this issue are to be addressed utilizing the following information:

    • A child attains a given age on the anniversary of the date that the child was born. For example, a child born on January 1, 2003, attains the age of 1 on January 1, 2004.

    • The revenue ruling applies to age determination for children under IRC Section 21 regarding dependent care benefits, Section 23 for adoption credits, Section 24 for child tax credits, Section 32 for earned income tax credits, Section 129 for dependent care assistance programs, Section 131 for foster care payments, Section 137 for adoption assistance programs, and Section 151 for dependency exemptions.

  5. If one of the following credits is being claimed for a TIN for which our records indicate a date of death prior to the tax year, correspond before using math error procedures. The credits to which this apply are Dependent care benefits, the Child Tax Credit, the Earned Income Tax Credit and the Education Credits. In this instance, the Service should take steps to ensure that taxpayers are given notice of the problem and an opportunity to explain. The correspondence should indicate that the TIN at issue is incorrect since SSA records indicate the TIN being used is for a person who was deceased prior to the tax year.

    1. If documentation is received indicating the math error is incorrect, use CC DM1DT to change or delete the DOD. See IRM 2.3.25, Command Codes DM1DT and DTVUE, for additional information.

    2. If appropriate documentation is not received, disallow the credit(s) and send Letter 105C using the following (indicate the specific credits, including exemptions if applicable, in an open paragraph):
      "We are disallowing your claim for the credits below because you omitted a correct social security number. The information provided by the Social Security Administration (SSA) indicates the number provided belongs to an individual who was deceased prior to the beginning of the tax year for which it is being used."

    Note:

    See IRM 21.6.1.5.1 , Determining the Exemption Deduction Procedure , for information regarding exemption allowances.


  6. If during a taxpayer contact it appears there may be a hardship situation or the taxpayer asks to be referred to Taxpayer Advocate Service (TAS) see IRM 13.1.7.2, TAS Case Criteria and IRM 21.1.3.18, Taxpayer Advocate Service Guidelines, for more information.

21.6.3.4.1  (01-05-2009)
Non-Refundable Credits Procedures

  1. For tax year 2008 and subsequent, the non-refundable credits are applied in the order that they appear in this section:

    • Form 1116, Foreign Tax Credit (Individual, Estate or Trust)

    • Form 2441, Child and Dependent Care Expenses

    • Schedule R, Credit for the Elderly or the Disabled

    • Form 8863, Education Credits (Hope and Lifetime Learning Credits)

    • Form 8880, Credit for Qualified Retirement Savings Contributions

    • Child Tax Credit

    • Form 8396, Mortgage Interest Credit

    • Form 8839, Qualified Adoption Expenses

    • Form 8859, District of Columbia First-Time Homebuyer Credit

    • Form 5695, Residential Energy Credits

    • Form 8834, Qualified Electric Vehicle Credit

    • Form 3468, Investment Credit

    • Form 5884, Work Opportunity Credit

    • Form 8861, Welfare-to-Work Credit

    • Form 6478, Credit for Alcohol Used as Fuel

    • Form 6765, Part III, Credit for Increasing Research Activities

    • Form 8586, Low-Income Housing Credit

    • Form 8830, Enhanced Oil Recovery Credit

    • Form 8826, Disabled Access Credit

    • Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit

    • Form 8845, Indian Employment Credit

    • Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips

    • Form 8820, Orphan Drug Credit, line 10

    • Form 8874, New Markets Credit

    • Form 8881, Credit for Small Employers Pension Plan Startup Costs

    • Form 8882, Credit for Employer - Provided Childcare Facilities and Services

    • Form 8900, Qualified Railroad Track Maintenance Credit

    • Form 8864, Biodiesel and Renewable Diesel Fuels Credit

    • Form 8896, Low Sulfur Diesel Fuel Production Credit

    • Form 8906, Distilled Spirits Credit

    • Form 8907, Nonconventional Source Fuel Credit

    • Form 8908, Energy Efficient Home Credit

    • Form 8910, Alternative Motor Vehicle Credit

    • Form 8911, Alternative Fuel Vehicle Refueling Property Credit

    • Form 8847, Credit for Contributions to Selected Community Development Corporations

    • Trans-Alaska Pipeline Liability Fund Credit, claimed on Form 3800, General Business Credit

    • Form 5884-A, Credits for Employers Affected by Hurricane Katrina, Rita, or Wilma

    • Form 8860, Qualified Zone Academy Bond Credit

    • Form 8912, Credit for Clean Renewable Energy and Gulf Tax Credit Bonds

    • Form 8844, Empowerment Zone and Renewal Community Employment Credit

    • Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts


  2. These non-refundable credits are:

    1. Subtracted from the tax amount.

    2. Limited to the amount of the tax liability.

    3. Used before refundable credits.

    Reminder:

    Non-refundable credits MUST BE APPLIED in the order they appear in this section.

    Exception:

    If the Child Tax Credit is claimed in addition to:

    • the Mortgage Interest Credit and/or

    • the Adoption Credit and/or

    • the D.C. First-Time Homebuyer Credit

      the Worksheet(s) in Publication 972, Child Tax Credit, must be used to compute the amount of Child Tax Credit and to determine if it will be used before the other credits to reduce tax.

    Exception:

    If the Residential Energy Credit is claimed in addition to:

    • the Child Tax Credit and/or

    • the Mortgage Interest Credit, Adoption Credit, or the D.C. First - Time Homebuyer Credit

      these credits must be computed before completing Part II of the Form 5695, Residential Energy Credit Carryfoward.


  3. Credits may be subject to limitation for taxpayers subject to the Alternative Minimum Tax, see Form 6251, Alternative Minimum Tax - Individuals.

  4. For taxable years 2000 through 2008, all the non-refundable personal credits (i.e. Child and Dependent Care Credit, Credit for the Elderly, Education Credits, Credit for Qualified Retirement Savings Contributions, Rate Reduction Credit, Child Tax Credit, Mortgage Interest Credit, Adoption Credit and the D.C. Homebuyer's Credit) are allowed to the extent of the full amount of the individual's regular tax and alternative minimum tax.

  5. Some credits may be eligible for carryback or carryover; refer to the individual form or schedule. (See IRM 21.5.9, Carrybacks.)

21.6.3.4.1.1  (02-12-2009)
Non-Refundable Credit Inquiries and Procedures

  1. Use the following procedures for non-refundable credit inquiries from a taxpayer.

    Note:

    When non-refundable credits requiring TIN validation are claimed, see IRM 21.6.1.6, Command Code DUPED and DDBCK, for appropriate use of CC DUPED and DDBCK for updating the Duplicate TIN database.

  2. When a taxpayer inquires by telephone:

    1. Request disclosure information from taxpayer to ensure you have the correct person. See IRM 21.1.3.2.3, Required Taxpayer Authentication .

    2. Accept oral statement for account action after disclosure information is verified. (See IRM 21.1.3, Operational Guidelines Overview.)

    3. Consider all related information and/or examine all documents before making adjustments or answering taxpayer inquiries.

    4. In the REMARKS section of an on-line adjustment, with or without a source document, enter complete disclosure information. (See IRM 21.5.2.4.6, Remarks Field.)

    5. If the adjustment is input on-line but a Form 4442, Inquiry Referral, is not required, no source document is sent to files.

    6. If the adjustment will not be input on-line or by Close Of Business (COB), complete Form 4442, Inquiry Referral.

  3. Follow this table for all taxpayer inquiries regarding non-refundable credits. Refer to subsections in this section for specific credit information and procedures.

    If the taxpayer And Then
    Claimed the credit on the original return Provides a copy of the appropriate form or substantiating information Follow the specific subsection in this section and adjust the account.
    Claimed the credit on the original return DOES NOT provide missing information Follow IRM 21.5.4, General Math Error Procedures.
    Credit WAS NOT claimed on the original return   1. Advise taxpayer to file an amended return.
    2. Send Form 1040X, Amended U.S. Individual Income Tax Return, and the appropriate form(s) to taxpayer via an IDRS letter. If taxpayer is on the phone and the form is ordered , the IDRS letter is not necessary if the taxpayer is informed of the mailing.

  4. If written documentation is required, advise taxpayer to send it to the site receiving the contact.

    Reminder:

    A fax is acceptable unless taxpayer's original signature is required. See IRM 21.5.3.4.4, Signature Requirements for Claims.

21.6.3.4.1.2  (02-12-2009)
Adjusting Non-Refundable Credit Accounts

  1. Math verify the form or schedule, if one is required.

  2. If the form, schedule, or documentation is incomplete and cannot be perfected with available information, follow claim processing in IRM 21.5.3.4, General Claims Procedures.

  3. If the credit requires a qualifying child, use CC INOLES to verify the name control, Taxpayer Identification Number (TIN), and date of birth of the qualifying child .

    Note:

    If the qualifying child is assigned an Individual Taxpayer Identification Number (ITIN), use the Real Time System (RTS) to verify the name control, TIN, and date of birth. See IRM 3.21.263, IRS Individual Taxpayer Identification Number (ITIN) Real Time System (RTS).

  4. Estimated tax penalty is not changed when applying a non-refundable credit.

    Exception:

    If the credit is claimed on a superseding return, estimated tax penalty is recomputed. (See IRM 20.1, Penalty Handbook)

  5. Adjust the tax account with TC 29X, Reason Code 036, (RC 035 for Education credits), and the appropriate Source Code and blocking series.

21.6.3.4.1.3  (10-01-2009)
Form 2441 Child and Dependent Care Credit

  1. If a taxpayer paid someone to care for his/her child, spouse, or dependent, the taxpayer may be able to reduce his/her tax by claiming the Child and Dependent Care Credit on his/her federal income tax return.

  2. A completed Form 2441, Child and Dependent Care Credit, must be submitted when claiming the credit.

  3. Taxpayer must file a joint return, if married, unless an exception applies.

  4. Taxpayer must furnish a valid Taxpayer Identification Number (TIN) for every qualifying person. This number may be:

    • A Social Security Number (SSN) issued by the Social Security Administration

    • An Individual Taxpayer Identification Number (ITIN) issued by the IRS if taxpayer is not eligible for an SSN.

    • An Adoption Taxpayer Identification Number (ATIN) issued by the IRS for a child while an adoption is pending

    Note:

    For taxpayers indicating a religious (e.g., Amish/Mennonite) or conscience-based objection to obtaining a TIN, refer to IRM 21.6.1.5.1 , Determining the Exemption Deduction Procedure .

    Note:

    See IRM 21.6.3.4, Credits Procedures, for more information regarding correct TINs.

  5. A qualifying person is a taxpayer's:

    1. Dependent qualifying child under the age of 13.

      Note:

      If the child turned 13 during the tax year, he/she is a qualifying person for the part of the year he/she was under age 13.

    2. Spouse, if physically or mentally unable to care for him/herself, who lived with the taxpayer for more than half the year.

    3. Disabled dependent (of any age), if physically or mentally unable to care for him/herself, who lived with the taxpayer for more than half the year and is the taxpayer's dependent.

    4. Disabled person (of any age), if physically or mentally unable to care for him/herself, who lived with the taxpayer for more than half the year and would have been the taxpayer's dependent except that he/she received gross income of $3500 or more or he/she filed a joint return or the taxpayer (or spouse, if filing jointly) could be claimed as a dependent on another taxpayer's return

  6. Effective for Tax Year (TY) 2006 and subsequent years, Notice 2005-42 allows a taxpayer to carry over unused dependent care benefits to be used in a grace period in the following year.

  7. See Publication 17, Your Federal Income Tax For Individuals, and/or Publication 503, Child and Dependent Care Expenses, for detailed information.

21.6.3.4.1.3.1  (10-01-2002)
Form 2441 Taxpayer Inquiry

  1. Taxpayers may inquire concerning the credit.

    If taxpayer And Then
    Claimed the credit on the original return The missing information is provided 1. Validate TIN if submitted for the qualifying person or care provider.
    2. Follow math error procedures.
    3. Adjust the account.
    Claimed the credit on the original return DOES NOT provide missing information Follow IRM 21.5.4, General Math Error Procedures.
    Claims "due diligence" was used to secure the provider's TIN The provider's TIN still cannot be secured Follow the guidelines in Publication 17, Your Federal Income Tax (For Individuals), under Form 2441, for Provider Identification Test.
    Credit WAS NOT claimed on the original return   1. Advise taxpayer to file an amended return.
    2. Send Form 1040X, Amended U.S. Individual Income tax Return, and Form 2441 to taxpayer.

21.6.3.4.1.3.2  (10-01-2009)
Form 2441 Adjusting the Account

  1. If the form is incomplete and cannot be perfected with available information, follow claim processing in IRM 21.5.3, General Claims Procedures .

  2. Math verify the Form 2441, Child and Dependent Care Credit.

  3. Use CC INOLES to verify the name control and Taxpayer Identification Number (TIN) of the qualifying person(s).

    Note:

    If the qualifying person is assigned an Individual Taxpayer Identification Number (ITIN), use the Real Time System (RTS) to verify the name control, TIN, and date of birth. See IRM 3.21.263, IRS Individual Taxpayer Identification Number (ITIN) Real Time System (RTS).

  4. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate Source Code (SC) and blocking series.

21.6.3.4.1.4  (10-01-2009)
Schedule R Credit for the Elderly or Permanently and Totally Disabled

  1. If a taxpayer and/or spouse is age 65 or older at the end of the tax year or any age if retired on permanent and total disability and have taxable disability income, the taxpayer may be able to reduce his/her tax by claiming the Credit for the Elderly or Permanently and Totally Disabled on his/her federal income tax return.

    Note:

    Taxpayer is considered age 65 on the day before the 65th birthday.

  2. Schedule R ( Form 1040) or Schedule 3 ( Form 1040A) must be submitted.

    • Filing status/age must be checked.

    • A physician's statement must certify the disability condition or the box must be checked to indicate the statement was filed or obtained in a previous year.

    • On a joint return, if both spouses are disabled, both must submit a statement.

    • The taxpayer may request the IRS to compute the credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Publication 17, Your Federal Income Tax (For Individuals), Publication 524, Credit for the Elderly or the Disabled, or Publication 554, Tax Guide for Seniors, for detailed information.

21.6.3.4.1.5  (10-01-2009)
Form 8863 Education Credits

  1. Taxpayer may claim an education credit for qualified tuition and related expenses paid to an eligible educational institution, including accredited colleges, universities, and vocational schools.

  2. A taxpayer can elect, for any year, only one of the credits for each student.

  3. A taxpayer whose filing status is married filing separately cannot claim the credits.

  4. The credit may be for expenses of taxpayer, taxpayer's spouse, or taxpayer's eligible dependent claimed on taxpayer's return.

  5. All students claimed on Form 8863 must have a valid Taxpayer Identification Number (TIN). A valid TIN includes an SSN, ITIN or ATIN.

    Note:

    For taxpayers indicating a religious (e.g., Amish/Mennonite) or conscience-based objection to obtaining a TIN, refer to IRM 21.6.1.5.1 , Determining the Exemption Deduction Procedure .

  6. Form 8863, Education Credits (Hope and Lifetime Learning Credits), must be submitted.

  7. For Tax Year (TY) 2005 or TY 2006, the Gulf Opportunity Zone Act of 2005, temporarily expanded the Hope and Lifetime learning credits for students attending (i.e., enrolled and paying tuition at) an eligible education institution located in the Gulf Opportunity Zone.

    • For taxpayers or their dependents who attended an educational institution located in the Gulf Opportunity Zone, the Hope credit was increased to 100 percent of the first $2200 ($2000 for TY 2005) in qualified tuition and related expenses and 50 percent of the next $2200 ($2000 for TY 2005) of qualified tuition and related expenses for a maximum credit of $3300 ($3000 for TY 2005) per student.

    • For taxpayers or their dependents who attended an educational institution located in the Gulf Opportunity Zone, the Lifetime Learning credit rate was increased from 20 percent to 40 percent.

  8. For Tax Year (TY) 2008 and TY 2009, the Heartland Disaster Tax Relief Act of 2008, temporarily expanded the Hope and Lifetime learning credits for students attending an eligible education institution located in the Midwestern disaster area.

    • For taxpayers or their dependents who attended an educational institution located in the Midwestern disaster area, the Hope credit is increased to 100 percent of the first $2400 in qualified tuition and related expenses and 50 percent of the next $2400 of qualified tuition and related expenses for a maximum credit of $3600 per student.

    • For taxpayers or their dependents who attended an educational institution located in the Midwestern disaster area, the Lifetime Learning credit rate is increased from 20 percent to 40 percent.

  9. See Publication 970, Tax Benefits for Education, for more information.

21.6.3.4.1.5.1  (10-01-2008)
HOPE Scholarship Credit

  1. The HOPE scholarship credit:

    1. Applies to expenses paid on or after January 1, 1998, for academic periods beginning on or after that date.

    2. For Tax Year (TY) 2008 is 100% of the first $1,200 and 50% of the amount that exceeds $1,200 but not in excess of $2,400. For TY 2007, is 100% of the first $1,100 and 50% of the amount that exceeds $1,100, but not in excess of $2,200 of out-of-pocket expenses for each eligible student.

    3. Requires that the student be enrolled at least half-time in one of the first two years of post-secondary education.

    4. Can be claimed for only two tax years per student.

21.6.3.4.1.5.2  (10-01-2003)
Lifetime Learning Credit

  1. The Lifetime Learning Credit:

    1. Applies to expenses paid on or after July 1, 1998, for academic periods beginning on or after that date.

    2. Is 20% of the first $10,000 ($5,000 for Tax Year (TY) 2002 and prior) of out-of-pocket expenses for all eligible students in the family.

      Note:

      See IRM 21.6.3.4.1.5, Form 8863 Education Credits, for situations in which the rate is 40% rather than 20%.

    3. There is no course-load requirement, the credit is available for education beyond the first two years of post-secondary education (including graduate studies), and may be claimed for an unlimited number of years.

21.6.3.4.1.5.3  (10-01-2009)
Form 8863 - Adjusting the Account

  1. If the form is incomplete and cannot be perfected with available information, follow claim processing in IRM 21.5.3, General Claims Procedures

  2. Use CC INOLES to verify the name control and Taxpayer Identification Number (TIN) of the student(s).

    Note:

    For taxpayers indicating a religious (e.g., Amish/Mennonite) or conscience-based objection to obtaining a TIN for the student, refer to IRM 21.6.1.5.1, Determining the Exemption Deduction Procedure.

    Note:

    If the student is assigned an Individual Taxpayer Identification Number (ITIN), use the Real Time System (RTS) to verify the name control, TIN, and date of birth. See IRM 3.21.263, IRS Individual Taxpayer Identification Number (ITIN) Real Time System (RTS).

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 035 and the appropriate SC and blocking series.

21.6.3.4.1.6  (10-01-2009)
Form 1116 Foreign Tax Credit

  1. To qualify for the credit, taxpayer must have paid or accrued income tax in a foreign country or U.S. possession.

  2. Taxpayer may claim the credit against U.S. income tax or deduct the foreign tax as an itemized deduction.

  3. If the change in the credit is the result of a refund of foreign taxes paid, manually compute and assess interest per IRM 20.2, Interest. Contact taxpayer to determine the refund date, if necessary.

    Reminder:

    If the refund of foreign taxes included no interest, restriction of the account can be avoided by using TC 298; enter the refund date in the interest computation field of the adjustment.

  4. Form 1116, Foreign Tax Credit, must be submitted unless all of the taxpayer's foreign source income is passive and total creditable foreign taxes are not more than $300 ($600 if married filing a joint return).

    Caution:

    See IRM 25.6.1.10.2.8.4 , Foreign Tax Credit, for important information regarding the statute period for these type of claims.

  5. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  6. See Form 1116, Foreign Tax Credit, Publication 17, Your Federal Income Tax (For Individuals), and Publication 514, Foreign Tax Credit for Individuals, for detailed information.

21.6.3.4.1.7  (10-01-2009)
Form 8907 NonConventional Source Fuel Credit

  1. To qualify for the credit, taxpayer must be engaged in the domestic production and sale of liquid, gaseous or solid synthetic fuels produced from coal or of gas produced from biomass, per IRC Section 45K.

  2. For Tax Year (TY) 2006 and subsequent, the credit is claimed as a general business credit on Form 3800, General Business Credit.

  3. For Tax Year (TY) 2005 the credit is figured on Form 8907.

  4. For Tax Year (TY) 2004 and prior, the taxpayer must include a credit computation with the claim; a specific form/schedule is not required.

  5. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

    4. Input Item Reference Number (IRN) 883 to record the credit.

21.6.3.4.1.8  (10-01-2009)
Form 8834 Qualified Electric Vehicle Credit

  1. To qualify for the credit, taxpayer must have placed a qualified electric vehicle into service during the tax year.

  2. Form 8834, Qualified Electric Vehicle Credit, must be submitted. (The credit must be carried to Form 3800, General Business Credit, for purposes of figuring the allowable general business credit.)

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8834, Qualified Electric Vehicle Credit, or Publication 17, Your Federal Income Tax (For Individuals), for detailed information.

21.6.3.4.1.9  (10-01-2009)
Form 3468 Investment Credit

  1. The investment credit consists of the sum of the rehabilitation credit, energy credit, qualifying advanced coal project credit, and qualifying gasification project credit.

  2. For Tax Year (TY) 2005 and prior, the Form 3468 must be submitted. Form 3800, General Business Credit, must be filed if two or more credits are claimed.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 3468, Investment Credit, for detailed information.

21.6.3.4.1.10  (10-01-2009)
Form 5884 Work Opportunity Credit

  1. To qualify for the credit, the taxpayer must have paid or incurred wages for employees who are certified as members of a targeted group and who began work after September 30, 1996 and before January 1, 2008.

    Exception:

    Section 201, Work Opportunity Tax Credit for Hurricane Katrina Employees, HR 3768, Katrina Emergency Tax Relief Act of 2005, P.L. 109-73 provides a credit for hiring qualified Hurricane Katrina Employees.

  2. For Tax Year (TY) 2005 and prior, Form 5884, Work Opportunity Credit, must be submitted. (The credit must be carried to Form 3800 if two or more credits are claimed.)

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 5884, Work Opportunity Credit, and instructions for detailed information.

21.6.3.4.1.10.1  (10-01-2009)
Form 5884-A - Credits for Affected Midwestern Disaster Area Employers

  1. The Emergency Economic Stabilization Act of 2008 provides for an Employee Retention Credit and the Employer Housing Credit to qualified employers.

    • The Employee Retention Credit provides a credit of 40 percent of the qualified wages (up to a maximum of $6000 in qualified wages per employee) paid by an employer to an eligible employee.

    • The Employer Housing Credit provides temporary income exclusion for the value of in-kind lodging provided for a month to a qualified employee (and the employees spouse or dependents) by or on behalf of a qualified employer. The amount of exclusion for any month for which lodging is furnished cannot exceed $600. The credit is equal to 30 percent of the value of lodging excluded from the income of a qualified employee.

  2. Both credits are reported on Form 3800. See Form 5884-A, Credits for Affected Midwestern Disaster Area Employers, and its instructions for more detailed information.

    Note:

    The Gulf Opportunity Zone Act of 2005 provided these credits to qualified employers affected by Hurricane Katrina, Rita, or Wilma.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

21.6.3.4.1.10.2  (10-01-2002)
Form 8884 New York Liberty Zone Business Employee Credit

  1. The Job Creation and Worker Assistance Act of 2002 created a new targeted group for the Work Opportunity Tax Credit (WOTC). See IRM 21.7.4.4.8.3.2.1, Expanded Work Opportunity Credit, New York Liberty Zone, Form 8884, for detailed information.

  2. This credit was only available for work performed during calendar year 2002 or 2003.

21.6.3.4.1.11  (10-01-2009)
Form 6478 Credit for Alcohol Used as Fuel

  1. Form 6478, Credit for Alcohol Used as Fuel, is used to claim the credit for alcohol used, or sold for use, as fuel in a trade or business. See IRM 21.7.4.4.8.3.3, Credit for Alcohol Used as Fuel, Form 6478, for more information.

  2. The credits are effective for fuels sold or used after December 31, 2004. For prior year credits, see previous versions of the Form 6478 and instructions.

  3. Form 6478, Credit for Alcohol Used as Fuel, must be submitted. (For Tax Year (TY) 2004 and prior the credit must be carried to Form 3800 if two or more credits are claimed.)

  4. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

    4. Input Item Reference Number (IRN) 884 to record the credit.

  5. See Form 6478, Credit for Alcohol Used as Fuel, and its instructions for detailed information.

21.6.3.4.1.12  (10-01-2009)
Form 6765 Credit for Increasing Research Activities

  1. To qualify for the credit, taxpayer must have qualified research expenses paid or incurred in carrying on an active trade or business. The credit applies to qualified amounts paid or incurred before January 1, 2009.

  2. For Tax Year (TY) 2006 and subsequent, the credit must be claimed as a general business credit on Form 3800, General Business Credit.

  3. Unless a taxpayer's only source of credit is from a pass-through entity, Form 6765, Credit for Increasing Research Activities, must be submitted.

  4. For taxable years including a research credit suspension period, a portion of the research credit may be suspended. See IRM 21.7.4.4.8.3.4.1, Research Credit Suspension Periods, for information and procedures involving the suspension periods.

  5. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  6. See Form 6765, Credit for Increasing Research Activities, for detailed information.

21.6.3.4.1.13  (10-01-2009)
Form 8586 Low-Income Housing Credit

  1. To qualify for the credit, taxpayer must own residential rental buildings providing low-income housing.

  2. For Tax Year (TY) 2006 and subsequent, the credit must be claimed as a general business credit on Form 3800, General Business Credit. Generally, the Form 8586 must also be filed unless the taxpayer is exempt from filing this form. See Form 8586 for details.

  3. Form 8609, Low-Income Housing Credit Allocation Certification, is issued by the state or local housing credit agency authorized to make credit allocations. A building owner is required to make a one-time submission of this form to the Low-income Housing Credit Unit at the Philadelphia Campus to the address specified in the instructions of the form.

  4. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  5. See Form 8586, Low Income Housing Credit, and Form 8609, Low-Income Housing Credit Allocation Certification, for detailed information.

21.6.3.4.1.14  (10-01-2009)
Form 8830 Enhanced Oil Recovery Credit

  1. To qualify for the credit, the taxpayer must own an operating mineral interest and have qualified enhanced oil recovery costs.

  2. For Tax Year (TY) 2006 and 2007, the credit is completely phased out. Any credit carried over from years prior to 2006 must be claimed as a general business credit on Form 3800, General Business Credit.

  3. For Tax Year (TY) 2005 and prior, Form 8830, Enhanced Oil Recovery Credit, must be submitted to claim the credit. (The credit must be carried to Form 3800, General Business Credit, if two or more credits are claimed.)

  4. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  5. See Form 8830, Enhanced Oil Recovery Credit, for detailed information.

21.6.3.4.1.15  (10-01-2009)
Form 8826 Disabled Access Credit

  1. To qualify for the credit, the taxpayer must have an eligible small business which has eligible access expenditures.

  2. If Form 8826, Disabled Access Credit, is filed with an amended return, one of the following must be present on the original return in order to allow the credit:

    • Schedule C

    • Schedule E

    • Schedule F

    • "Other Income" claimed on line 21, Form 1040, U.S. Individual Income Tax Return, or the equivalent on Form 1040X, Amended U.S. Individual Income Tax Return.

      Note:

      The absence of these items indicates the taxpayer has no business ownership or participation.

      Note:

      If Form 8826, Disabled Access Credit, or Form 3800, General Business Credit, claiming the credit is filed with an amended return and the criteria above are met, follow Category A procedures in Exhibit 21.5.3–2, Examination Criteria (CAT A) - General, if the amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. If these schedules or items are not present, disallow the credit and use the following language when explaining the disallowance:
    "We have not allowed your claim for the Disabled Access Credit. The Disabled Access Credit is a business credit. There is no indication of business ownership or activity based on the information for the tax year."

  4. For Tax Year (TY) 2006 and subsequent, the credit must be claimed as a general business credit on Form 3800, General Business Credit.

  5. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  6. See Form 8826, Disabled Access Credit, for detailed information.

21.6.3.4.1.16  (10-01-2009)
Form 8835 Renewable Electricity, Refined Coal, and Indian Coal Production Credit

  1. To qualify for the credit, taxpayer must sell electricity produced in the U.S. or U.S. possessions from qualified energy resources at a qualified facility to an unrelated person.

  2. For Tax Year (TY) 2006 and subsequent (Section A of Form 8835 completed) the credit can be claimed as a general business credit on Form 3800, General Business Credit. For Tax Year (TY) 2006 and subsequent (Section B of Form 8835 completed) the credit is figured in Part II of the Form 8835

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit, for detailed information.

21.6.3.4.1.17  (10-01-2009)
Form 8845 Indian Employment Credit

  1. To qualify for the credit, taxpayer must be an employer who pays wages and health insurance costs for American Indians who are qualified employees.

  2. For Tax Year (TY) 2006 and subsequent, the credit can be claimed as a general business credit on Form 3800, General Business Credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8845, Indian Employment Credit, for detailed information.

21.6.3.4.1.18  (10-01-2009)
Form 8846 Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips

  1. To qualify for the credit, the taxpayer must be an employer and have:

    1. Paid or incurred employer social security and Medicare taxes during the taxable year on tips

    2. Received by employees from customers for providing, delivering, or serving food or beverages for consumption where tipping is customary.

  2. For Tax Year (TY) 2006 and subsequent, the credit can be claimed as a general business credit on Form 3800, General Business Credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips, for detailed information.

21.6.3.4.1.19  (10-01-2009)
Form 8820 Orphan Drug Credit

  1. To qualify for the credit, the taxpayer must have paid or incurred qualified clinical testing expenses either as the owner, or pass-through expenses as a partner or shareholder.

  2. For Tax Year (TY) 2006 and subsequent, the credit must be claimed as a general business credit on Form 3800, General Business Credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8820, Orphan Drug Credit, for detailed information.

21.6.3.4.1.20  (10-01-2009)
Form 8847 Credit for Contributions to Selected Community Development Corporations

  1. To qualify for the credit, the taxpayer must have made qualified contributions to selected community development corporations.

  2. For Tax Year (TY) 2006 and subsequent, the credit must be claimed as a general business credit on Form 3800, General Business Credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8847, Credit for Contributions to Selected Community Development Corporations, for detailed information.

21.6.3.4.1.21  (10-01-2009)
Trans-Alaska Pipeline Liability Fund Credit

  1. To qualify for the credit, the taxpayer must have made payments into the Trans-Alaska Pipeline Liability Fund.

  2. There is no supporting schedule or form for this credit. Taxpayer must claim credit on Form 3800, General Business Credit.

  3. See IRM 21.7.4.4.8.3.16, Trans-Alaska Pipeline Liability Fund Credit, for more details.

  4. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

21.6.3.4.1.22  (10-01-2009)
Form 8844 Empowerment Zone and Renewal Community Employment Credit

  1. To qualify for the credit, taxpayer must have paid or incurred qualified wages, which can include certain training or educational expenses, to a qualified empowerment zone employee who lives and works in an empowerment zone.

  2. Form 8844, Empowerment Zone and Renewal Community Employment Credit, must be submitted. (The credit is never carried to Form 3800, General Business Credit.)

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8844, Empowerment Zone and Renewal Community Employment Credit, for detailed information.

21.6.3.4.1.23  (10-01-2009)
Form 8861 Welfare-to-Work Credit

  1. To qualify for the credit taxpayer must have paid or incurred wages to an employee who:

    • Is certified as a long-term family assistance recipient, and

    • Began work after December 31, 1997, and before January 1, 2006.

  2. For Tax Year (TY) 2006 and subsequent, the credit can be claimed as a general business credit on Form 3800, General Business Credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8861, Welfare-to-Work Credit, and its instructions for detailed information.

21.6.3.4.1.24  (10-01-2009)
Form 3800 General Business Credit

  1. If more than one of the credits listed on Form 3800, General Business Credit, are claimed, the total credit must be summarized on Form 3800 and if applicable, the appropriate credit form must be attached.

    Note:

    See the specific credit form for filing requirements.

  2. If attached, Form 8582–CR, Passive Activity Credit Limitations, must be math verified.

    Note:

    See Form 8582–CR and its Instructions for detailed information.

  3. For Tax Year (TY) 1997 and prior, excess business credits may be carried back three years and then carried forward fifteen years. Credits arising in TY 1998 and subsequent, may only be carried back one year and then carried forward twenty years as a result of Restructuring and Reform Act of 1998 (IRS RRA 98).

  4. Form 3800, General Business Credit, must be math verified.

  5. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  6. See Form 3800, General Business Credit, and its instructions for detailed information.

21.6.3.4.1.25  (10-02-2009)
Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts

  1. To qualify for the credit, the taxpayer must have:

    1. An alternative minimum tax liability and adjustments or preferences (other than exclusion items) in the prior tax year, or

    2. A minimum tax credit carryforward from the prior to the current tax year, or

    3. A qualified electric vehicle credit or a nonconventional source fuel credit (For Tax Year (TY) 2006 and prior only) disallowed for the prior tax year because use of the credit was limited by taxpayer's tentative minimum tax.

  2. Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts, may be attached but is not required in most cases.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. Beginning in Tax Year (Tax Year (TY)) 2007, if a taxpayer has any unused minimum tax credit carryforward from 2004 or earlier years, he/she may qualify for a refund of that credit amount. See IRM 21.6.3.4.2.10, Refundable Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts, Form 8801, for information on the refundable portion of this credit.

  5. See Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates, and Trusts, for detailed information.

21.6.3.4.1.26  (10-01-2009)
Child Tax Credit

  1. Beginning with the 1998 tax year, a credit is allowed for each qualifying child under age 17 at the end of the calendar year in which taxpayer's taxable year begins. The credit amounts will increase according to the following:

    If the tax year is ... Then the credit is ...
    1998 $400 per child
    1999 $500 per child
    2000 $500 per child
    2001-2002 $600 per child
    2003-2010 $1,000 per child

  2. A portion of the child tax credit may be refundable. See IRM 21.6.3.4.2.8, Form 8812, Additional Child Tax Credit, for information on Form 8812, Additional Child Tax Credit.

21.6.3.4.1.26.1  (02-12-2009)
Child Tax Credit Qualifications

  1. See Publication 972, Child Tax Credit for qualification information.

    Note:

    Tax Year (TY) 2004 and prior, a qualifying child was required to be the taxpayer's dependent.
    For TY 2005 and subsequent, a qualifying child is no longer required to be the taxpayer's dependent. When the qualifying child is not the taxpayer's dependent, Form 8901, Information on Qualifying Children Who Are Not Dependents, must be submitted.

    Reminder:

    Taxpayers may claim the dependency exemption, child tax credit, EITC, and Child and Dependent Care credit for the same qualifying child.

21.6.3.4.1.26.2  (10-01-2009)
Adjusting the Account

  1. When claiming the child tax credit, the name(s) and TIN(s) of the child(ren) must be shown on the amended return, or Form 8901, Information on Qualifying Children Who Are Not Dependents, if applicable. If the name or TIN of the child is omitted, the IRS can recompute the tax liability and deny the credit under math error procedures.

    Note:

    For taxpayers indicating a religious (e.g., Amish/Mennonite) or conscience-based objection to obtaining a TIN, refer to IRM 21.6.1.5.1, Determining the Exemption Deduction Procedure.

  2. The taxpayer must furnish a valid Taxpayer Identification Number (TIN) for each qualifying child. This number may be:

    1. A Social Security Number (SSN) issued by the Social Security Administration.

    2. An Individual Taxpayer Identification Number (ITIN) issued by the IRS if the individual is not eligible for an SSN.

    3. An Adoption Taxpayer Identification Number (ATIN) issued by the IRS for a child while an adoption is pending.

    Note:

    See IRM 3.13.5.24, Individual Taxpayer Identification Numbers (ITINs), and IRM 3.13.5.25, Adoption Taxpayer Identification Numbers (ATINs), for information regarding ITIN/ATIN issues. See IRM 21.6.3.4, Credits Procedures, for information regarding valid/correct TIN information.

    Note:

    For Tax Year (TY) 2005, see IRM 21.6.1.8, Taxpayers unable to obtain a Social Security Number (SSN) for a child born in 2005 because of Hurricane Katrina, for additional information.

  3. The Child Tax Credit contains an age criterion that must be met for credit allowance. The qualifying child must have been under the age of 17 at end of the calendar year. Command Code (CC) INOLES, or in the case of an ITIN, the Real Time System (RTS) can be used to verify date of birth. See IRM 3.21.263, IRS Individual Taxpayer Identification Number (ITIN) Real Time System (RTS).

  4. Verify each qualifying child's TIN is valid and the age requirement is met, then compute the child tax credit using the worksheet located on Desktop Integration/Accounts Management Service (DI/AMS) or in the Form 1040 instruction booklet.

    Note:

    Publication 972, Child Tax Credit, must be used to figure the credit if any of the following are present:

    • Form 8839, Qualified Adoption Expenses

    • Form 8396, Mortgage Interest Credit

    • Form 8859, District of Columbia First-Time Homebuyer Credit

    • Taxpayer is excluding income from Puerto Rico

    • Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion

    • Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa

    • AGI is greater than $110,000 for Married Filing Jointly

    • AGI is greater than $75,000 for single, Head of Household or Qualifying Widower

    • AGI is greater than $55,000 for Married Filing Separate

  5. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  6. If the taxpayer was allowed the credit during processing, but is not entitled to all or a portion of the credit:

    1. Follow the procedures in IRM 21.5.4.4.1, Setting the Initial Math Error Action.

    2. Explain to the taxpayer the adjustment was made and he will receive a notice explaining the adjustment and his appeal rights.

21.6.3.4.1.27  (10-01-2009)
Form 8839 Qualified Adoption Expenses

  1. A taxpayer who paid qualified expenses to adopt an eligible child and the adoption became final during the tax year may be able to reduce his/her tax on his/her federal income tax return by claiming the Adoption Credit on Form 8839, Qualified Adoption Expenses.

    Note:

    See Form 8839, Qualified Adoption Expenses, and its instructions for detailed qualification information.

  2. Taxpayers are also entitled to claim a credit for qualified adoption expenses paid during the immediately preceding tax year, if the child was a citizen or resident of the U.S. when the adoption process began. In the case of a child with special needs, the credit can be claimed in the year the adoption is final even if no qualified expenses are paid.

  3. If the taxpayer is unable to provide complete information in Part I, Form 8839, Qualified Adoption Expenses, because they were unsuccessful or the adoption was not final by the end of the tax year, they are instructed to complete what information they can on line 1 and to enter "See Page 2" in the columns for which they do not have information. They are instructed to enter the name and address of any agency or agent (such as an attorney) that assisted in the attempted adoption on the bottom of page 2. If this information is incomplete, follow instructions in IRM 21.5.3.4, General Claims Procedures

  4. The eligible child must be:

    • Under 18 years old, or

    • Any age, if physically or mentally incapable of caring for him/herself

  5. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  6. See Form 8839, Qualified Adoption Expenses, and its instructions for detailed information.

21.6.3.4.1.28  (10-01-2009)
Form 8396 Mortgage Interest Credit

  1. To qualify for the credit, a taxpayer must have a mortgage credit certificate (MCC) issued under a qualified MCC program in connection with the taxpayer's principal residence.

  2. Form 8396 must be submitted and math verified.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8396, Mortgage Interest Credit, Publication 17, Your Federal Income Tax (For Individuals), or Publication 530, Tax Information for First-Time Homeowners, for detailed information.

21.6.3.4.1.29  (10-01-2009)
Form 8859 District of Columbia First-Time Homebuyer Credit

  1. A taxpayer who bought a home in the District of Columbia (D.C.) may be able to reduce his/her tax by claiming the District of Columbia First-Time Homebuyer Credit on his/her federal income tax return.

    Note:

    See Form 8859, District of Columbia First-Time Homebuyer Credit, and its instructions for detailed qualification information.

    Caution:

    Eligible taxpayers are not allowed to claim both the District of Columbia First-Time Homebuyer Credit on Form 8859 and the First-Time Homebuyer Credit on Form 5405. If both credits are claimed and the purchase date of the home is in 2008, the taxpayer is allowed the District of Columbia First-Time Homebuyer Credit, Form 8859. If the purchase date of the home is in 2009, the taxpayer is allowed the First-Time Homebuyer Credit, Form 5405. See IRM 21.6.3.4.2.11, First-Time Homebuyer Credit, for more information.

  2. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  3. See Form 8859, District of Columbia First-Time Homebuyer Credit, or Publication 17, Your Federal Income Tax (For Individuals), for detailed information.

21.6.3.4.1.30  (10-01-2009)
Form 5695 - Residential Energy Efficient Property Credits

  1. The Energy Policy Act of 2005 provides for a Nonbusiness Energy Property Credit and a Residential Energy Efficient Property Credit to qualified taxpayers who made energy efficient purchases.

  2. The Nonbusiness Energy Property Credit provides taxpayers a credit for improving the energy efficiency of an existing home.

    Note:

    The American Recovery and Reinvestment Tax Act of 2009 extends this credit through the end of 2010.

  3. The Residential Energy Efficient Property Credit provides taxpayers a credit for adding qualified solar electric property, solar water heating equipment, small wind energy property, geothermal heat pump property, or a fuel cell power plant to his/her existing and newly constructed homes in the United States.

  4. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  5. See Form 5695, Residential Energy Efficient Property Credits, for detailed information.

21.6.3.4.1.31  (10-01-2009)
Form 8880 - Credit for Qualified Retirement Savings Contributions

  1. A taxpayer and/or spouse (if married filing jointly) who made one of the following:

    1. Contributions (other than rollover contributions) to a traditional or Roth IRA

    2. Elective deferrals to a 401(k), 403(b), governmental 457, SEP, or SIMPLE plan

    3. Voluntary employee contributions to a qualified retirement plan

    4. Contributions to a 501(c)(18)(D) plan


    may be able to reduce his/her tax by claiming the Credit for Qualified Retirement Savings Contributions on his/her federal income tax return.

  2. An eligible individual must be:

    • 18 or older at the end of the tax year

    • Not be claimed as a dependent on someone else's tax return

    • Not a full-time student

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8880, Credit for Qualified Retirement Savings Contributions, or Publication 17, Your Federal Income Tax (For Individuals) for detailed information.

21.6.3.4.1.32  (10-01-2002)
Form 8881 - Credit for Small Employer Pension Plan Startup Costs

  1. For information concerning the Credit for Small Employers Pension Plan Startup Costs, see IRM 21.7.4.4.8.3.19, Credit for Small Employers Pension Plan Startup Costs, Form 8881.

21.6.3.4.1.33  (10-01-2002)
Form 8882 - Credit for Employer Provided Childcare Facilities and Services

  1. For information concerning the Credit for Employer-Provided Childcare Facilities and Services, see IRM 21.7.4.4.8.3.18, Credit for Employer-Provided Childcare Facilities and Services, Form 8882.

21.6.3.4.1.34  (01-09-2003)
Form 8874 - New Markets Credit

  1. For information concerning the New Markets Credit, see IRM 21.7.4.4.8.3.20,New Markets Credit, Form 8874.

21.6.3.4.1.35  (10-01-2009)
Form 8860 - Qualified Zone Academy Bond Credit

  1. Eligible holders of qualified zone academy bonds use Form 8860, Qualified Zone Academy Bond Credit, to claim the qualified zone academy bond credit.

  2. Form 8860 must be attached and math verified.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. Refer to IRM 21.7.4.4.8.3.17, Qualified Zone Academy Bond Credit, Form 8860, or Form 8860, Qualified Zone Academy Bond Credit, for detailed information.

21.6.3.4.1.36  (10-01-2007)
Advance Payment of Child Tax Credit (APCTC)

  1. The Jobs and Growth Tax Relief Reconciliation Act of 2003 directed the Treasury to advance payment of an increase to the 2003 Child Tax Credit (CTC) to eligible taxpayers.

  2. The IRS processed Advance Child Tax Credit checks based on original return data from posted Tax Year (TY) 2002 returns.

  3. Notice 1319, Notice of Advance Payment of Increase of the 2003 Child Tax Credit, was mailed to all taxpayers who received the advance payment.

21.6.3.4.1.37  (10-01-2009)
Form 8864, Biodiesel and Renewable Diesel Fuels Credit

  1. Form 8864, Biodiesel and Renewable Diesel Fuels Credit, is used to claim a credit for the tax year in which the sale or use occurs. The credit consists of:

    • Biodiesel Credit

    • Renewable Diesel Credit

    • Biodiesel Mixture Credit

    • Renewable Diesel Mixture Credit, and

    • Small Agri-Biodiesel Producer Credit

  2. For Tax Year (TY) 2006 and subsequent years the credit can be claimed as a general business credit on Form 3800, General Business Credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8864, Biodiesel and Renewable Diesel Fuels Credit, for detailed information.

21.6.3.4.1.38  (10-01-2009)
Form 8896, Low Sulfur Diesel Fuel Production Credit

  1. Form 8896, Low Sulfur Diesel Fuel Production Credit (LSDFPC), generally is 5 cents for every gallon of low sulfur diesel fuel produced at a particular facility by a qualified small business refiner during the taxable year.

  2. For Tax Year (TY) 2006 and subsequent, the credit can be claimed as a general business credit on Form 3800, General Business Credit.

  3. When adjusting the tax account:

    1. Use TC 291 with a money amount to allow/increase the credit.

    2. Use TC 290 with a money amount to decrease the credit.

    3. Use RC 036 and the appropriate SC and blocking series.

  4. See Form 8896, Low Sulfur Diesel Fuel Production Credit, for detailed information.


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