Energy Efficient Home Improvement Credit

[mootzie]

How does the Energy Efficiency Home Improvement Credit differ from the Residential Clean Energy Credit? Is the Residential Clean Energy Credit a one time credit?

[AmyC]

1. The IRS uses Energystar for their official answers, so will I, below.

2. Residential clean energy credit can be taken multiple times and it carries over when not used.

From Federal Tax Credits for Energy Efficiency we see:

Energy Efficiency Home Improvements

Claim 30% up to $1,200 for these qualifying energy property costs and certain energy efficient home improvements.  The credits are nonrefundable, so you cannot get back more on the credit than you owe in taxes. You may not apply any excess credit to future tax years.

Residential Clean Energy Equipment Upgrades - save 30%

If you invest in renewable energy for your home (solar, wind, geothermal, fuel cells or battery storage technology), you may qualify for an annual residential clean energy tax credit of 30% of the costs for qualified, newly installed property from 2022 through 2032. The credit percentage drops to 26% for property installed in 2033 and 22% for property installed in 2034.

For these upgrades, you can carry forward any excess credit and apply it to reduce the tax you owe in future years.

[gjgogol]

Does the credit get applied to Total Tax line 24 or the amount you owe line 37?

[DoninGA]

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@gjgogol wrote:

Does the credit get applied to Total Tax line 24 or the amount you owe line 37?

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The credit is from Schedule 3 Line 8 and flows to the Form 1040 Line 20.  The credit reduces your Total Tax on the Form 1040 Line 24.

[gjgogol]

@DoninGASo if I was due $2K credit and line 24 was $3K, my tax liability would be $1K? And my tax refund if I was getting one on line 34 would increase by $2K; or if I owed taxes on line 37, that line would decrease by $2K?

[DoninGA]

@gjgogol If Line 24 on the Form 1040 was $3k before the credit was applied then it would be $1k after the 2k credit was applied.  So that would increase your tax refund or it would decrease the taxes owed.