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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7220
Experience:  15years with H & R Block. Divisional leader, Instructor
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We built a new house and moved-in early October 2011. The

Resolved Question:

We built a new house and moved-in early October 2011. The house is installed with (1) Solar PV electric generation system and (2) Geothermal Heat Pump and system for heating and cooling. I know that I could get a credit of 30% on each of these items. I work for a company and both federal and state taxes are withheld each month. Say my total tax for 2011 is $10,000 and my withheld amount is $9,000. That means I need to pay $1,000. Now say the solar and geothermal cost was $50,000. Now my credit should be $15,000. Question is do I get a refund of $14,000 (i.e, $15K minus the $1K I owe) or a refund of $9,000 (i.e, my tax liability of $10K minus the $1K I owe) and the rest is transferred to next year taxes, or my credit means, I just do not have to pay the $1000 (which I still owe with the energy credit) and the rest is differed to the next year taxes?

Your help is appreciated
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.

Robin D :

Hello and thank you for using Just Answer.



There are two categories of tax credits: Refundable, and Non-Refundable. Residential Energy Tax Credits for 2011 are considered to be Non-Refundable tax credits under the IRS regulations, just as the previous tax credits were.


Robin D :


A non-refundable credit is a tax credit that can reduce your tax liability to zero (0), but not below.


Customer:

ok. Does that mean in the example that I presented. That come tax time .. if i fill in my numbers, i would get a refund for $9000, and I would not have to pay the $1000 i owe, and the rest of the $5000 credit will applicable to the 2012 taxes?

Customer:

Robin, what you wrote I had already got that from web searches, what i need answered is the question with my specific example of what refund if any will i get back? I apprecaite your help

Customer:

Robin, I will away form the computer for 5 mins - it is 3:24 ET. I will be right back.

Customer:

sorry, i am back

Robin D :

No that means that the credit will only be used on your 2011 return to lower your liability by the credit amount (zero if credit is same or more than liability). YOu do not get to carry it forward and any amount of credit not needed to lower your laibility will be lost.

Robin D :

This is a really easy to follow expalination of the credits
http://www.us-ac.com/LuxaireRes2011FedTaxCreditUpdatedFAQ2011-06-27.pdf

Customer:

Oh, so, for 2011 -- in my example - i will get back $9000 + $1000 i owe. And the rest of $5000 will be lost and cannot be carried over to 2012

Robin D :

correct

Robin D :

On a personal note, I applaud you for your forward thinking. I have only thus far been able to switch to solar on sailboat and RV but when I move I plan on doing more with solar and wind.

Customer:

thanks. But if i install solar say in 2012, can i get the credit then?

Customer:

and the geothermal in 2011.

Customer:

if the geothermal is already installed

Robin D :

Yes, you can use the credit for new solar. It is not a one time thing. The installation will determine what year to claim

Customer:

thanks.

Customer:

for your help

Robin D :

The goe in 2011 and then if you install solar in 2012 the costs should be on your 2012 return

Robin D :

You are welcome

Customer:

you see, my geo is already installed and my solor is scheduled to be installed this week.

Customer:

there is no way to carry forward the credits?

Customer:

because the cost of them togehter would be about $140K

Robin D :

No, the date of installation determines the year.

Robin D :

I know

Customer:

ok

Customer:

thanks.

Robin D :

It would have been a great year to pull money out of a taxable account

Customer:

yes

Customer:

thanks anyway for your help. I will hit accept now

Robin D :

Thank you

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7220
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 2 other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Robin,

 

I read through IRS form 5695 which is for the credit. On page 5 of the referred PDF, on instruction for line 28, it says that "If you cannot use all of the credit because of the tax liability limit (line 26 is less than line 23), you can carry the unused portion of the credit to 2011". This I guess is the form for 2010. Has it changed in 2011?

 

http://www.irs.gov/pub/irs-pdf/f5695.pdf

 

thanks for your help

Expert:  Robin D. replied 2 years ago.

I am so red faced. You can carry forward till 2016 the credits fro the geothermal. Please forgive me. I was stuck in thinking on the first years back when the doors and insulation and windows were introduced. There was and is no carry forward on those items and they too are nonrefundable. Although the provisions for the geothermal and solar are nonrefundable you will be allowed to carry forward the over amount till 2016 (unless the credit changes). No forms for 2011 are ready yet but I have found no attempts to change or reduce the geo and solar credits at this point.

I do apologize. I too was still looking into the changes when I just got your message.

Customer: replied 2 years ago.
thanks.
Expert:  Robin D. replied 2 years ago.
No thank you. In fact I was typing my new info when your message came back.
Customer: replied 2 years ago.

You see, i needed to make sure that i am not losing any money as i need to plan out my 2012. Thank you for your help.

 

The system is asking me to accecpt the answer and make a payment. Do I have to make a payment for the same question?

 

Best regards.

Expert:  Robin D. replied 2 years ago.
No you are not required to accept again. I will close this conversation for us. I understand completely. The issue is a complicated one and the credit has been changed numerous times since it first was offered. Keep your eye on any legislation that involves energy since the cuts will be coming but depending on November and the vote no one knows how much and what will be changed.

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