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New to solar and question about the 30% of the purchase price Federal tax credit

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  • #16
    Originally posted by Jasper7821 View Post
    Ok, ik still not getting it. Since I got a $835 refund of the $4,500 I paid in Federal taxes and my Federal tax owed was $3,665, are you saying I'd get nothing back since I didn't owe any Federal tax at the end of the year?
    No I am not saying that.
    It all depends on how much you withhold. If you are sure your credit will cover your tax liability then reduce your federal tax withholding. That way you have the money now instead of having to wait. If you don't understand the difference between a refund and a tax credit then consult a tax professional..That way you will avoid a big surprise in the event I have misunderstanding of your tax situation. I am not a tax professional nor do I have all the facts. All I can help you with is the concept of a tax credit that reduces your liability.

    I will try to explain the concept of withholding. When you do witholding it is like putting money in a bucket. In this case the IRS has the bucket with your name and social security number on it. They keep the money in the bucket until you file your taxes and figure out how much you owe. If you owe anything for taxes when they get your return, they take enough money out of the bucket to pay the taxes you owe and give you the rest as a refund. You are required to put some money in the bucket but you get to decide how much
    Last edited by Ampster; 04-02-2019, 07:39 AM.
    9 kW solar, 42kWh LFP storage. EV owner since 2012

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    • #17
      I understand what withholding is and tax liability. I'm sorry if I'm not understanding it all.
      I filled out the 5695 and schedule 3. From my 1040, line 15 used to be 3665, now it's zero.
      Line 19 ( the amount you overpaid) used to be $828, now it's $4493.
      Line 20 (amount of line 19 you want refunded to you) would be $4993.
      So wouldn't that be my refund?
      Last edited by Jasper7821; 04-02-2019, 11:16 AM.

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      • #18
        Sorry, I am not a tax guy. I can't help you with that form. My accountant fills out the forms. All I can tell you is to try to estimate your liability, subtract the credit and withold accordingly.
        9 kW solar, 42kWh LFP storage. EV owner since 2012

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        • #19
          Thanks, I sent an email to my accountant with my figures asking for help but they're too busy and can't get back to me until after the tax season.

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          • #20
            Originally posted by Jasper7821 View Post
            Thanks, I sent an email to my accountant with my figures asking for help but they're too busy and can't get back to me until after the tax season.
            That is the same answer I get this time of the year. Good luck.
            9 kW solar, 42kWh LFP storage. EV owner since 2012

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            • #21
              Thanks, I think I filled the form out correctly to see what I would get back next year. Oh well, we'll see what happens. Thanks

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              • #22
                Originally posted by solarix View Post
                They changed the rule from being placed in service in the taxable year to just having installation started. Would have to spend the money this year though.
                Do you have a link for that ? I started installation in 2019, but did not take any credit on my 2019 tax return. Should I file an amended return for the amount I spent in 2019 ? Probably not worth it, as I spent only $2000 in 2019, so it'd save me (30% - 26%) * $2000.

                What I really hoped for, was a rule that says if you spent 5% in 2019, the 30% would be grandfathered in for your 2020 return - so if you placed the system into service in 2020, you could take 30% on the entire amount (including what you spent in 2019). But there's nothing on the 2020 Form 5695 that allows for the 30% credit (instead of 26%).

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                • #23
                  See my comment on the other thread about refiling 2019.
                  9 kW solar, 42kWh LFP storage. EV owner since 2012

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