of direction any credit will pass to the decrease back taxes. The IRS isn't stupid. So, yeah, in case you qualify for $7000 of refund, $3K is going to the decrease back taxes and the $4K is refunded to you. remember, in case you fail to stay interior the domicile for the 36 months, you will owe the finished $7K decrease back. remember, you are able to no longer document for the credit till when you shut.