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I qualified for a $2,000 Energy Home Improv. tax credit, but why is this not applying this credit to my final refund amount?

 
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2 Replies

I qualified for a $2,000 Energy Home Improv. tax credit, but why is this not applying this credit to my final refund amount?

It depends on what type of Energy-Saving improvement you installed.  What did you install in your home that is eligible for a credit?

Vanessa A
Expert Alumni

I qualified for a $2,000 Energy Home Improv. tax credit, but why is this not applying this credit to my final refund amount?

The Home Energy Credits are nonrefundable 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, this is a  use it or lose it so if you can't claim it this year, you lose it.

 

For the Residential Energy Credit, if you don't use it this year, it can be carried forward to future years until you lose it or the residential energy credit expires, which is currently set to be in 2034. 

 

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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