To receive immediate benefit, the homebuyer may consider adjusting his or her federal income tax withholding to receive the benefit from the credit on a monthly basis. The homebuyer may file a new W-4 form with his or her employer reflecting the MCC credit savings. By taking this action, the number of exemptions will increase, reducing the amount of taxes withheld and increasing the buyer's disposable net income.

Using the Basic MCC Example, during the first year, the homeowner would be entitled to a tax credit of $2,000. Based upon such an entitlement, he or she would be able to file in advance a revised W-4 withholding form taking into consideration this tax credit and have approximately $166.67 per month in additional disposable income. ($2,000/12 = $166.67).

If the homebuyer chooses not to revise their W-4, they may claim the benefit of their MCC when they file their annual tax return. To see an example of a completed IRS 1040 with an MCC, go to Completed form 1040 Example.

Taxpayers who file itemized returns may take a deduction for their mortgage interest paid each year, less the amount equal to the tax credit taken. (In the Basic MCC Example, the interest deduction would be $7,200 less $2,000, or $5,200).