Do I qualify for the Federal Tax Credit?

[ButchDeal]

I must be missing something. Here in Cal. is how I interpret the FED tax credit. As per lclevel1's

Example #1 if you pay out 10k in fed taxes and your tax liability is only 8k you would get 2k back from the difference which is logical. But you get ZERO back that year for the solar credit, it's a credit not an actual refund. It can be used to offset what you OWE.

It is a credit on your taxes, so you would get a refund.

My wife and I being recently retired our annual income is significantly lower than what it used to be when I had my business so when I installed my system back in April of 2013 I ended up with a credit of approx $5,800. When my taxes were done for that year we owed about $300 to the fed which we offset with the $300 worth of solar credit to zero it out the balance owed leaving us a carryover CREDIT of about $5,500 for the next tax year.

You did your taxes incorrectly. You could still go back and refile your 2013 with an amendment.

But the "Federal Solar credit" money can only be used to offset money you owe not being able to be refunded like an overpayment.

If I'm wrong in what I understand to be correct please let me know.

You are incorrect in this. You can get back in the year up to what you paid in taxes (through withholdings or quarterly payments), the rest carries forward.

[gregvet]

I must be missing something. Here in Cal. is how I interpret the FED tax credit. As per lclevel1's

Example #1 if you pay out 10k in fed taxes and your tax liability is only 8k you would get 2k back from the difference which is logical. But you get ZERO back that year for the solar credit, it's a credit not an actual refund. It can be used to offset what you OWE.

Example #2 pay 10k in fed taxes and your tax liability is 12k you would owe 2k to the feds. You CAN use a portion of the tax CREDIT towards that amount for the 2k which you would not owe. Leaving a remaining balance of (solar) fed credit of 5.5k to be used in the following year or years until 2016 I believe.

Example #3 pay 10k in fed taxes and your liability is only 5k you get back 5k on your return. You would receive ZERO back from the solar credit.

My wife and I being recently retired our annual income is significantly lower than what it used to be when I had my business so when I installed my system back in April of 2013 I ended up with a credit of approx $5,800. When my taxes were done for that year we owed about $300 to the fed which we offset with the $300 worth of solar credit to zero it out the balance owed leaving us a carryover CREDIT of about $5,500 for the next tax year.

We adjusted our tax deductions on our pension amounts to receive more money per month in our pocket and will likely owe more fed tax this next year which we will again offset with the credit and whatever is leftover (if we don't use it all) will carryover to the next tax year when we will have to finally use it up either in pension tax adjustments or a 401k withdrawal to use up the remaining credit balance.

But the "Federal Solar credit" money can only be used to offset money you owe not being able to be refunded like an overpayment.

If I'm wrong in what I understand to be correct please let me know.

Lets take this one step further:
In example 1: You had $5800 solar credit, you would get back 2K($10000-$8000) plus $5800 = $7800.
In example 2: You owed an additional 2K and had a $5800 Solar credit. You would get back $10000-$12000+5800 = 3800.
In example 3: You had $5800 Solar credit You would get back 5K for liability overpayment and also get back Liability less Solar credit to the extent of your liability ($10000-$5000+($5000+($5000-$5800))) = $10000 with $800 carried forward to the following year. That was the way I calculated my taxes and I did get a full refund on my liability.

[HX_Guy]

I must be missing something. Here in Cal. is how I interpret the FED tax credit. As per lclevel1's

Example #1 if you pay out 10k in fed taxes and your tax liability is only 8k you would get 2k back from the difference which is logical. But you get ZERO back that year for the solar credit, it's a credit not an actual refund. It can be used to offset what you OWE.

Example #2 pay 10k in fed taxes and your tax liability is 12k you would owe 2k to the feds. You CAN use a portion of the tax CREDIT towards that amount for the 2k which you would not owe. Leaving a remaining balance of (solar) fed credit of 5.5k to be used in the following year or years until 2016 I believe.

Example #3 pay 10k in fed taxes and your liability is only 5k you get back 5k on your return. You would receive ZERO back from the solar credit.

My wife and I being recently retired our annual income is significantly lower than what it used to be when I had my business so when I installed my system back in April of 2013 I ended up with a credit of approx $5,800. When my taxes were done for that year we owed about $300 to the fed which we offset with the $300 worth of solar credit to zero it out the balance owed leaving us a carryover CREDIT of about $5,500 for the next tax year.

We adjusted our tax deductions on our pension amounts to receive more money per month in our pocket and will likely owe more fed tax this next year which we will again offset with the credit and whatever is leftover (if we don't use it all) will carryover to the next tax year when we will have to finally use it up either in pension tax adjustments or a 401k withdrawal to use up the remaining credit balance.

But the "Federal Solar credit" money can only be used to offset money you owe not being able to be refunded like an overpayment.

If I'm wrong in what I understand to be correct please let me know.

The fact that you paid throughout the year doesn't change how much you owed in taxes. It's not how much do you owe at the end of the year, it's how much did you owe throughout the year.

As you said, it's not a refund, but a refund would mean that even if you owed $0 all year (say you had no income at all), then you would get money back. That's not what the solar credit is.

But if you did have income, and you owed $5,000 in taxes on that income, then you would get that $5,000 back if you paid into your taxes. If you paid nothing toward your taxes, and you would owe X - the tax credit. If you paid $5,000 toward your taxes owed, then you'd get the $5,000 back. If you over paid your taxes, say you paid $7,000 but only owed $5,000, then you'd get $7,000 back.

[peakbagger]

The optimistic method is if you absolutely know you are getting a solar tax credit at the end of the year, revise your W-2s to claim more exemptions so they take less out of your paycheck. Then when you are filing taxes you would normally owe extra because you under withheld. If you figured it out right, the tax credit will offset what you owe. Sure you don't get a big check from Uncle Sam but you had more money to spend all year.

A bit of a rant are all those tax ads about how much money the US owes you when you do your taxes. The objective is to owe them money not get a check back.

[HX_Guy]

A bit of a rant are all those tax adds about how much money the US owes you when you do your taxes. The objective is to owe them money not get a check back.

I agree, it's funny how excited people get about getting a big refund when doing their taxes. All it means is you paid too much throughout the year, basically giving the government your money to use interest free.

[SunEagle]

I agree, it's funny how excited people get about getting a big refund when doing their taxes. All it means is you paid too much throughout the year, basically giving the government your money to use interest free.

Some people can't save on their own so use the Feds as a piggy bank to do the saving for them. Sad but it is sometimes easier for people to work that way.