Whether you're buying a car or making home improvements, the Inflation Reduction Act created and increased a number of tax credits to encourage energy-efficiency. CPA and TurboTax Live expert Miguel Burgos explains. Watch the video above or read the transcript below.
Video transcript:
Tracy Byrnes: All right. So there's been a lot going on with energy efficient credits, especially, since the Inflation Reduction Act was introduced.
Miguel Burgos, CPA, TurboTax live expert, is here with us to break it all down. Miguel, first of all, thank you for being here, because this stuff gets really confusing. So give us like, a big-picture top line. What do people need to know?
Miguel Burgos: Well, with the energy credits, I think, one of the biggest thing for this tax season. It's the clean vehicle credit. Now, the credit, it's up to $7,500. It's a non-refundable credit, which means that if you don't have a tax liability, you will not get it as a tax refund.
However, it can really reduce the tax liability of the taxpayers. And it also applies at a lower amount to previously own clean vehicle credits. So a lot to look into. And a lot to research before we file our tax return.
Tracy Byrnes: 100%. And one of the things you mentioned was to get in touch with your dealership. Why do I need to do that?
Miguel Burgos: Well, that's something that we have new. And it's going to start to be implemented now for the tax year 2024, that we are going to follow on the tax season in 2025. But still, we want to give a heads up to the taxpayers.
And it's that the law has a feature where the credit can be transferred for the first time to the dealership. So if you're going to buy a clean vehicle credit now — a clean vehicle now in 2024, you got to make sure that you have good communication with the dealership, but also with your tax expert, and the tax resources you have available to make sure that you do qualify for that credit within the income limits before you transfer it to the dealership, because you don't want to have any surprise when you file your tax return next year.
Tracy Byrnes: Yeah. So that's super important. But that's for this year [2024]. That's not for this — that's not for your 2023 tax return, but that's an appreciated heads up.
OK. Let's talk about our homes. We're all trying to put stuff in our homes that helps, solar panels, things like that. What do we need to know about that?
Miguel Burgos: Well, with the residential energy credits, we have two main categories. We have energy efficient home improvement credit, when you have doors, windows, thermal pumps, and other equipment that make your home more energy efficient. That provides a nonrefundable credit that can go up to $2,000.
Also, we have the residential clean energy credit, when you have solar equipment, when you have a geothermal pump, which can go up to 30% of the expense or the purchase price of that equipment. Also non-refundable. You need the documentation.
But once again, if you have any question, you’ve got to make sure you can use resources like the ones you can find on turbotax.com. You can talk to TurboTax experts. So make sure that what you're going to invest in does qualify for the credit, and see how much of a tax benefit you will get before you make that investment, and you buy the equipment.
Tracy Byrnes: Right. That's a really valid point. So keep all your documentation, receipts, everything. So you brought it up: tell us how TurboTax could help, though, because this stuff gets very confusing.
Miguel Burgos: Well, we're happy to help. And with TurboTax Live, we have the best of two worlds. We have technology. It's a tax software. But also, we have live tax experts. So when you're going to make a tax move or when you're filing your return, you can talk to a real person from your home, from your mobile device, from your computer, and get a consult.
And even, they can review your entire return. Or if you want, we can do full service. We can gather all your documents. We can prepare the return for you and filing 100% online. So that way, you can make sure that you don't miss any of this deductions or credits.
Tracy Byrnes: Yeah. Super important. So keep all your documentation. And you know better than anybody how you prefer to prepare your tax return. You got a lot of options.
Miguel Burgos with TurboTax. Thank you so much for helping us out.
Miguel Burgos: It's a pleasure.
