 Many Americans opt to use online programs like TurboTax and H&R Block to complete their annual tax filings. While there’s nothing wrong with this route, there are some missed benefits when you don’t use accounting firms. And with the increased popularity of these “quick-and-easy” tax services, there’s been a significant rise in online CPAs like ours, Tarpey, Sickler, and Associates, that offer the same assistance but with many more perks. #1 — The Customer Service of Accounting FirmsLet’s start with a prominent advantage of using accounting firms or an online CPA rather than a program like TurboTax. The customer service offered by accounting firms is far superior to these cheaper online businesses. What happens when you’re halfway through the process, and you get confused or have a question? More often than not, you either “speak” with a robot that directs you to online FAQs, or you have to pay more to talk to a human representative. With an online CPA like us, you can always count on personalized and helpful customer service — no robots allowed! #2 — A Better (And Often Cheaper) DealThe low price tag on online tax services is very appealing at first, but then (as mentioned above), you have to pay even more if you need additional help or have particular questions. That’s why using an online CPA firm can be cheaper in the long run. For example, at Tarpey, Sickler, and Associates, we offer the same price as TurboTax’s Deluxe program with a state filing — $175. But with us, you get so much more. #3 — Professionals That Can Handle ComplicatedSome of these online programs (or doing taxes yourself) may work for the average single filer who works one job with no dependents. But once your tax situation gets a bit more complicated, you can save more money by using accounting firms. Automated programs aren’t yet smart enough to adjust to your specific situation and hunt for those extra deductions and credits that are often hidden. Plus, mistakes on your taxes can result in audits that cost you even more money. It’s essential to use a CPA to do your taxes right the first time. #4 — Taxes and MoreMost people rely on accounting firms for tax season, but many services go beyond April 15th. By using a CPA, you get personalized assistance for many facets of your life and business. For example, you can receive accounting advice for your new business, consulting for your non-profit, year-round tax planning and preparation, and assistance with financial statements, payroll tax and checks, and even Quickbooks training. #5 — Help with Audits and Extras What if streamlined online services make a mistake and you get audited? Will they have your back? With accounting firms, you know that if there is an issue with your taxes and the IRS audits you, we’ll be there to support you every step of the way. Sometimes, audits occur due to errors, but they are often there to check for more complicated taxes (think multiple homes, rentals, businesses, dependents, etc.). A personalized online CPA is a far better route to assist you with any problem-solving needs.
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 Are you buying your first home? Congratulations! This should be an exciting time in your life; but many first-time homebuyers often feel confused and overwhelmed with the process. The number one source of stress? That hefty price tag that makes your jaw drop. But don’t worry too much — there are several ways for you to save money on your first home purchase. The MCC Tax Credit for First-Time HomebuyersAt our CPA firm, Tarpey, Sickler, and Associates, we specialize in helping first-time homebuyers navigate the MCC Tax Credit. This tax perk falls within a federal program but runs on a state-by-state basis. For example, if you’re from Texas, you need to look specifically at the TDHCA MCC because that will determine the tax credit conditions. Be sure to look at your specific state’s program to learn exactly what the incentive is for you. We know that this process can be a little confusing, so if you work with us, we make sure to walk you through it step-by-step. And in the world of home buying, tax incentives are where you should start when you want to save money. What is the MCC Tax Credit?A recent blog post goes into greater detail, but let’s look at what the MCC Tax Credit is and how it helps first-time homebuyers. To start, it’s a tax credit, which is different from a tax deduction (the other route for home buying tax incentives). This merely means that you can receive up to $2,000 on your tax returns each year throughout the entirety of your home loan. On a 30-year loan, that’s up to $60,000 of savings! Again, the MCC Tax Credit differs from state-to-state, but how the credit is calculated remains the same. The credit percentage ranges from 10% to 50% and is based on your mortgage’s annual interest. Some states offer 20%, while others 50%. To repeat, be sure to look at your specific states’ program. For Texas, that’s the TDHCA MCC. For California, it’s the CFHA MCC. And, so forth. Other Ways to Save Money as a First-Time HomebuyerTax credits and deductions like the MCC Tax Credit should be your go-to strategy for saving money. However, there are other ways to chisel that price down a bit more. Increase Your Down PaymentThe more money you can offer upfront as a down payment, the more you will save throughout your loan. But don’t put all your money down! You want to pay more upfront, but you don’t want to put yourself in a bad financial situation as a result. First, determine a reasonable price you can afford, meaning what you can offer as a down payment and continue to pay on your mortgage over the years. Select the Right Mortgage for YouNot all mortgages are created equal, so you should shop around before settling on one. Conventional mortgages offer low rates, but some loan programs might be more beneficial to you and your particular situation. These are FHA loans, USDA loans, and VA loans. Consider all the details (your past, your work, where you want to buy a house, etc.) and compare rates before choosing the right mortgage or loan. State-By-State ProgramsFinally — and as you already know — each state offers a different rate for the MCC Tax Credit. But this tax credit isn’t the only tax incentive or lender program offered by states! Look at your specific location and determine which first-time homebuyer programs can benefit you and your situation.
 If you’re buying a home, you’ve probably searched for governmental tax programs that can save you money. Although there are a few different programs out there, the Mortgage Tax Credit Certificate is specific to first-time homebuyers and the specialty at our CPA firm, Tarpey, Sickler, and Associates. Buying your first home will be a significant expense, so this federal program assists those just starting the process. Let’s look at precisely what it is and how it can help you. First-Time HomebuyersTo qualify for the Mortgage Tax Credit Certificate, you must fall under the definition of a “first-time homebuyer” set by the Finance Housing Agency. A previous blog post goes into more depth here; but to sum it up, you need to fall into one or more of these categories:
What Does the Mortgage Tax Credit Certificate Do?Now that you’ve determined whether you qualify, let’s dive deeper into what the mortgage tax credit certificate does for you. The certificate is a tax credit, often called the MCC Tax Credit. By applying for the certificate, you can save up to $2,000 annually when you complete your taxes. The MCC Tax Credit is a non-refundable federal tax credit that operates on a state-by-state basis. Not every state is the same. The credit you can receive ranges between 10% to 50% of the interest you pay on your mortgage and caps at $2,000 annually. That means you can save up to $2,000 a year for the entirety of your loan. On a 30-year mortgage, that's up to $60,000 in interest savings! How Does the MCC Tax Credit Work?This is where the mortgage tax credit certificate gets a little complicated. Remember, if you’re interested in applying for the certification and taking advantage of this tax perk, you can always contact our CPA firm to help! But for now, let’s look at an example of how the MCC Tax Credit works. The amount of credit you can claim is a percentage of the interest you pay on your mortgage. Specifically, the program looks at the previous year’s interest and ranges between 10% - 50%. The more expensive the home purchase is, the lower the percentage will be. Example: How Much Do You Get on a $100,000 Mortgage?Let’s pretend that you qualified for a 50% credit on the mortgage interest that you pay. Here’s an example of what that could look like on a $100,000 home loan.
Loan Amount – $100,000 Interest Rate – 3.0% Total Mortgage Interest Paid Year 1 – $2,876 50% of Mortgage Interest Paid– $1,438 Total Credit Earned – $1,438 As you can see in the example above, the home buyers didn’t earn the full $2,000 because their interest rate was lower. The homeowners will receive the payout with their annual taxes because it’s a tax credit and not a deduction. Hopefully, you now understand what the Mortgage Tax Credit Certificate is and how it can help you. Again, if you need any assistance understanding the MCC Tax Credit, feel free to contact us!  No one is as excited about buying a house as first-time homebuyers are, but they also tend to be the most confused with the process. With such a large purchase and investment, it’s essential to seek the assistance you need to ensure you’re getting the most bang for your buck. That’s where the MCC Tax Credit Program comes into play. It’s an excellent incentive for those who qualify, as it can help reduce your new home’s overall cost. We can all agree that buying a house is very different than buying a refrigerator! Buying a home is not only an advantageous move for your finances, but it’s also great for the economy, so the government wants to assist you in making this purchase. Bottom line: you don’t have to pay the ticket price or do it alone. Many tax incentives help to get the keys to a new home in your hand with a significant discount. MCC Tax Credit ProgramAt our CPA Firm, Sickler, Tarpey & Associates, we specialize in helping first-time homebuyers with the MCC Tax Credit Program. This tax incentive can reduce the cost of your future home by up to $2,000 per year. On a 30-year mortgage, that’s a total savings of up to $60,000 — a huge dent in your future home’s price! It sounds great — and it's truly an exceptional incentive — but the catch is that not all homebuyers are eligible. Let’s look at who can take advantage of the MCC tax credit. First-Time HomebuyersThe MCC (Mortgage Credit Certificate) Program is a product of the federal government, but it’s administered by each state individually. For example, Texas has the TDHCA MCC and California the CHFA MCC. Its purpose is to give assistance and relief to first-time homebuyers on a state-by-state level. So although the maximum benefit is $2,000 per year, the TDHCA MCC, as an example, might differ from other states. Even though states operate individually, the qualifications for eligibility are the same. If you’re not purchasing your first home, you may not qualify. However, there are a few exceptions: “New” HomebuyersMany assume that a first-time or “new” homebuyer is someone who’s never bought a house before. This definition is correct; however, the HFA (Housing Finance Agency) defines a “new” homebuyer a little differently. You qualify as a “new” homebuyer if you haven’t owned a residence in the past three years. That means if you bought a home in the past (so you’re not a “first-time” homebuyer), but have not owned a home in the past three years, you can still qualify for the MCC tax credit! All Homebuyers in Targeted AreasThe first-time homebuyer requirement and the “new” homebuyer definition don’t apply for those purchasing a home in a specified target area. These sections are particular to each state and defined by the Department of Housing and Urban Development (HUD). Often, targeted areas fall into more impoverished or rural areas that could use a housing boost. That means you could buy more than one home in your life and still qualify for the MCC tax credit. Active Military and Veteran HomebuyersThe first-time and “new” homebuyer requirements also don’t apply for active military and veterans. If you fall into these categories, you don’t have to be purchasing your first home or follow the three-year rule to benefit from the MCC tax credit. Many People QualifyAlthough the MCC Tax Credit Program focuses on first-time homebuyers, there are a few exceptions. These exceptions are in place to help other populations. So just because you aren’t buying your very first home, it’s still worth your time to check and see if you qualify. Again, look at the state-level (TDHCA MCC for Texas, CHFA MCC for California, etc.) to discover how you can benefit specifically. If you need help, contact us!
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AuthorRandy Tarpey CPA Archives
October 2020
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