2011 Tax Year and Renewable Energy Credit

Hello,
I am about to start several enhancements to my home heating system. These
include items like installing a new energy-efficient hot water boiler; and
adding solar panels. I've been researching the various federal and state
rebates/tax credits. e.g The Federal Renewal Energy Tax Credit for solar is 30%,
with no maximum. Solar panel installation is not cheap - can easily run $15-$20K
minimum.
It leads to an interesting situation. Basically, once I factor in all itemized
deductions and tax credits - I get a huge refund in April 2012. The amount of
this refund is greater than my payroll withholding for the 2011 tax year!
So for example (these figures below are notional, not exact - just to
illustrate).
- I calculate my payroll withholding by 12/31/2011 is say $3600
(and keep in mind, I have already paid almost 4 months Jan-April 2011; so say
already paid $1200;
I have to pay $2400 over May-Dec)
a. if I keep payroll withholding at same level for the rest of 2011 ; I get a
refund of $6000.
b. If I adjust federal payroll withholding so that $0 federal tax is withheld; I
still get a refund of $3500+.
I don't want to get a giant refund in April 2012. I would prefer to make use of
the money in the rest of 2011. Case (b) above makes the refund smaller than (a);
but still significant.
In the example above - what options do I have to get the $3500 now?
Thank you.
Reply to
Simon Templar
include items like installing a new energy-efficient hot water boiler; and adding solar panels. I've been researching the various federal and state rebates/tax credits. e.g The Federal Renewal Energy Tax Credit for solar is 30%, with no maximum. Solar panel installation is not cheap - can easily run $15-$20K minimum.
deductions and tax credits - I get a huge refund in April 2012. The amount of this refund is greater than my payroll withholding for the 2011 tax year!
say already paid $1200;
refund of $6000.
I still get a refund of $3500+.
of the money in the rest of 2011. Case (b) above makes the refund smaller than (a); but still significant.
.. and how are you getting a refund in excess of your withholding when the credit is nonrefundable? Take a closer look at Part II of Form 5695 where you calculate the limit on the amount of credit available for the current year. Any excess gets carried over to the next year.
Reply to
Alan
include items like installing a new energy-efficient hot water boiler; and adding solar panels. I've been researching the various federal and state rebates/tax credits. e.g The Federal Renewal Energy Tax Credit for solar is 30%, with no maximum. Solar panel installation is not cheap - can easily run $15-$20K minimum.
deductions and tax credits - I get a huge refund in April 2012. The amount of this refund is greater than my payroll withholding for the 2011 tax year!
say already paid $1200;
refund of $6000.
I still get a refund of $3500+.
of the money in the rest of 2011. Case (b) above makes the refund smaller than (a); but still significant.
You can increase the number of exemptions on your W-4 to a very large number so that no federal taxes are withheld from your paycheck from now till December. You cannot get back the $1,200 you already paid until you file, so file your tax return next year as early as you can -- around January might be possible. Social security, medicare, etc will still be withheld.
As a rough calculation each exemption reduces your monthly income by $300. So if you make $3,000 a month you would need just 10 exemptions to reduce your federal taxable income to zero. If you a non-resident alien you evidently need more exemptions.
What about state? California might have solar credits too.
Any credit received reduces cost basis in your house. With the 250k/ 500k exemption on profit when you sell a house this probably doesn't matter, but just in case.
Reply to
removeps-groups
include items like installing a new energy-efficient hot water boiler; and adding solar panels. I've been researching the various federal and state rebates/tax credits. e.g The Federal Renewal Energy Tax Credit for solar is 30%, with no maximum. Solar panel installation is not cheap - can easily run $15-$20K minimum.
itemized deductions and tax credits - I get a huge refund in April 2012. The amount of this refund is greater than my payroll withholding for the 2011 tax year!
say already paid $1200;
a refund of $6000.
withheld; I still get a refund of $3500+.
of the money in the rest of 2011. Case (b) above makes the refund smaller than (a); but still significant.
Starting in 201 I think the maximum for all improvements is a total of $500.
ed
Reply to
ed
It looks like the credit is 30%, with no limit, for solar and a few other things. But $500 for other things like insulation, efficient windows, etc -- and even the allocation of that $500 has limits, like only $200 for windows, etc. My source is
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last year for solar credits is 2016, although that could change.
Reply to
removeps-groups
is
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The last year for solar credits is 2016, although that could change. Yes, you exactly right. Please check
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hot-water boiler in 2011 : it is max of $500 - if you didn't claim$500 in previous year (I didn't).For solar water heating in 2011: It is 30% *with no limit*So in this case; if solar cost you say $10K; you getting 3K as taxcredit. I am doing solar installation in next month.
Also, my state is offering some tax credit as well (although it is capped at 750 or something). but state is also offering rebates of 1500.
In any case - sounds like I cannot "reclaim" federal tax payments already paid. I just have to adjust federal withholding for remainder of year to $0; and then remember to file early next year.
Reply to
Simon Templar

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