The Home Energy Credits are non-refundable credits. This means, it is about your tax liability, not how much you paid quarterly or how much you had withheld, only how much you owe based on your income. So, even if you paid in $5,000 but you have a tax liability of $0 because your income is less than says $13,850 for a single person, you would not be eligible for the credit because you did not have a tax liability because you did not have enough taxable income.
So depending on which energy credit you are trying to claim, will depend on what happens to the credit. If you are taking the home efficiency improvement credit, which is what the tankless water heater would fall under, this is a use it or lose it so if you can't claim it this year, you lose it.
Look at line 16 on your 1040, then also look at line 24. If the amount on line 16 is less than the full credit, then this is the maximum amount of the credit you use this year will be that number. If you have other credits, that may also reduce the tax liability, this may also reduce the amount of the credit you receive.
Then look at line 24. If this line is $0, then you received one of more credits that brought your taxes down to $0. If this is the case, and you had multiple nonrefundable credits, you may not get the full credit for one or more of the credits. If you look on line 16 of your form 5695, this will show any eligible carryforward, but as stated, they are ONLY for the residential energy credit, not the Energy Efficient Credit.
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