Nonrefundable Energy Credit

[bacc]

I'm applying a nonrefundable residential energy credit (Form 5695) to my taxes this year. My understanding is this can only reduce my tax liability, but TurboTax appears to be calculating a refund.

Here's the breakdown:

Taxes Owed: 19k

Taxes Paid: 17k

Credit: 7k

Given that the credit is nonrefundable, I would expect my tax liability to be $0 with a carryforward of $5,000 for next year. However, the final summary in TurboTax says I'm owed a refund of $5,000. What am I missing?

[RobertB4444]

The taxes owed are reduced BEFORE your payments are calculated in.  So if you owe 19K then the system will reduce it to 11.5K and apply the full credit.  Then your taxes paid will be added in and you will receive a refund of $5500 because you paid in 17K.

@bacc