I know that if I put solar panels in my home I will get 30% back from the govt. Does that mean if I pay 2K I will get back around a 3K check? Or will my income play a roll where I may not get back as much?
Not a good answer: CNBC had a news bit, that it can take 0 to 20 years for you to break even in energy costs after installing solar panels. Please don't buy them just for the tax deduction. See if you can google a calculator for this - do research. I have a brother in law that buys anything under the sun just because he gets a tax deduction. I'm sure you're not like that though. Run the numbers of what you will save vs the 2K you will spend You may never break even
The Tax Lady is almost always right, but I must disagree on the $500 limitation concerning a solar electric system (from the price, it sounds like that's what the original question was about) installed in 20. If there was such a change, there would have been an outcry on the solar installers' forum I visit, just as there was jubilation when the limit on the tax credit was removed a few years ago.
It's not your income, but the tax you pay. This is a NON refundable credit. You won't see a difference unless you actually owe tax. If you are retired and living on social security and savings, you don't pay tax, so you'd get $0 from the solar panels. If you are married, have a bunch of kids and get a refund of all money withheld anyway, you'd get $0 from the solar panels. If you currently average, say $200 in actual income tax, your $2,000 investment would create a $3600 tax credit, but you'd only get back $200 the first year. (This would reduce the tax bill, increasing any refund of money already withheld to pay that tax bill.) The remaining amount would carry forward to 202. You can keep carrying it forward as long as the credit is available (I think that's currently 206). Get your 200 return out and get form 5695 and run the numbers. Edit, ignore TRO. She doesn't keep up with tax law changes. BOTH the residential and solar credits exist in 20. The Residential credit now limited to $500.
The energy credits are non-refundable. That means that they only reduce your existing tax liability. If the credit is more than your tax liability, the excess is lost. Examples: If your tax liability is $5,000 and you qualify for a $3,000 non-refundable credit, it reduces your tax liability to $2,000. If you had paid in $5,000, you would get a refund for $3,000. If you had paid in $3,000, you'd get a refund of $,000. If your tax liability was $2,000, a $3,000 credit would wipe it out and the other $,000 would be lost forever. If you had paid in $2,000, you'd get a refund for $2,000. If you had paid in $,000, you'd get a refund of $,000. BTW, check your math. 30% of $2k is not $3,000.
