Your modified adjusted gross income (MAGI) is your adjusted gross income, which is your income minus your above the line deductions, plus any foreign earned income. If you want help understanding and working out your MAGI, speak to a trusted tax professional, or the IRS directly as they are the ones who define it.

Don’t forget that there’s a “phase out range” of $20,000. So basically, the tax credit amount is reduced to zero once you earn more than $145,000 as a single or $245,000 as a married couple, and is reduced proportionally if you’re earning between those amounts. So, for example, if you were earning $135,000, you would get half the tax credit, or $3250.

Can you get a tax credit if you want to build a home without a mortgage?
It’s not the mortgage companies who dole out the credit, it’s the IRS, so if you’ve got enough cash to build a house outright, good for you — as long as you fulfill all the other criteria, you just fill out the forms and you get your deduction. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. So as long as you move in by midnight, April 30th, you’re good to go. But remember, for the $6500, the date of first occupancy must be after November 6, 2009 and on or before April 30, 2010, so If you’ve moved in already, you’re out of luck.

If it’s a newly-constructed home bought from a home builder, then the eligibility for the tax credit is determined by the settlement date, so if you’re in that situation, be sure to check with a tax advisor.