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I'm interested in a hybrid hot water heater as part of the EEHIC. I get a tax rebate each year, will I see any benefit with this credit, and if not, any way to help it?
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I'm interested in a hybrid hot water heater as part of the EEHIC. I get a tax rebate each year, will I see any benefit with this credit, and if not, any way to help it?
The credit can only offset your income tax liability, but that is not the same as a refund. Your tax liability is what the government ends up keeping. For example, if you have $5000 of withholding and get a $1000 refund, your tax liability was $4000. Or, if you had $8,000 of withholding and got a $4000 refund, your tax liability is still $4000. Your tax liability is shown on line 22 of your form 1040. It does not include self-employment tax.
If your tax liability is less than the amount you expect as an energy efficiency credit, you would need to fine some way to increase your income tax. You might convert some IRA funds to a Roth IRA, or you might switch your 401k pre-tax contributions to after-tax, to create more tax that can be offset by the credit.
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I'm interested in a hybrid hot water heater as part of the EEHIC. I get a tax rebate each year, will I see any benefit with this credit, and if not, any way to help it?
The credit can only offset your income tax liability, but that is not the same as a refund. Your tax liability is what the government ends up keeping. For example, if you have $5000 of withholding and get a $1000 refund, your tax liability was $4000. Or, if you had $8,000 of withholding and got a $4000 refund, your tax liability is still $4000. Your tax liability is shown on line 22 of your form 1040. It does not include self-employment tax.
If your tax liability is less than the amount you expect as an energy efficiency credit, you would need to fine some way to increase your income tax. You might convert some IRA funds to a Roth IRA, or you might switch your 401k pre-tax contributions to after-tax, to create more tax that can be offset by the credit.
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I'm interested in a hybrid hot water heater as part of the EEHIC. I get a tax rebate each year, will I see any benefit with this credit, and if not, any way to help it?
(Edit: OK Now)
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I'm interested in a hybrid hot water heater as part of the EEHIC. I get a tax rebate each year, will I see any benefit with this credit, and if not, any way to help it?
Thanks.
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I'm interested in a hybrid hot water heater as part of the EEHIC. I get a tax rebate each year, will I see any benefit with this credit, and if not, any way to help it?
Thank you so much @Opus 17. The difference between tax rebate and tax liability is exactly what was tripping me up, and your response cleared that up perfectly.
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