How does the Solar Water Heater Tax Credit work?
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Question by sgmillionaire: How does the Solar Water Heater Tax Credit work?
If someone doesn’t make enough to pay into the tax system, how will the 30% tax credit work? As a refund?
This question is based on something I overheard and you can always learn something new about the IRS and how various deductions work. The company was listing the amount on the spreadsheet as money you would save from the purchase price from the unit but that must be false in any scenario.
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4 Responses to How does the Solar Water Heater Tax Credit work?
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It reduces your tax bill. If you don’t pay taxes, you get NOTHING.
v b
May 30, 2012 at 5:54 pm
In order to claim this credit you would have to make enough money to “pay into the system.” If you did not, you will not receive the credit. This credit will never come back as part of your refund.
imataxlover
May 30, 2012 at 6:25 pm
No, a tax credit is an amount subtracted directly from the taxes you owe. No taxes owed, no credit subtracted from them. However, you may be able to carry forward some of the credit to the next tax year. Check with the IRS instructions to be sure.
rtfm
May 30, 2012 at 6:40 pm
Form 5695, Residential Energy Credits, from LAST year is in the link below. The new one should be up on that site eventually. But you can get an idea of how it works. Just ignore the part about the cap of $ 500 or $ 2000.
As you’ve guessed, the tax credit is not refundable – you won’t get paid if you don’t owe that much tax.
If you’re that poor, some cities like San Francisco or Berkeley (I think) may have programs to help you make your home more energy efficient, in some cases, even subsidizing a solar array.
roderick_young
May 30, 2012 at 6:49 pm