Federal
The Federal tax credit is a Refundable tax credit. This means if you owe $2,000.00 to the IRS and you have an investment tax credit (ITC) worth $5000.00 you will be able to collect a check from the IRS for $3,000.00. If you want you may also stretch that credit out over four years and use it against your taxes owed each year.
State
The Utah State Renewable Energy tax credit is a Non-refundable tax credit. This means if you have paid $2,000.00 to the state for taxes and you have a tax credit for $3,000.00 you will be reimbursed the $2,000.00 and the $1,000.00 credit remaining will be carried over to the next year. You will be able to use this remaining credit against your taxes for a total of four years.
Refundable tax credit – a credit against a specific tax that may entitle the taxpayer to a refund; when the credit is applied against the liability, if the amount of the credit reduces the liability to less than zero, then the taxpayer is eligible for a refund of the difference.
Nonrefundable tax credit – a credit against a specific tax that does not entitle the taxpayer to a refund; when the credit is applied against the liability, if the amount of the credit reduces the liability to less than zero, the taxpayer is not eligible for a refund of the difference.
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