How to estimate federal solar credit on next year taxes. Will I receive the full credit? What happens if my federal taxes are less than the credit amount?

Forum|Forum|3 years ago
November 5, 2022
3 replies
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DoninGA

Level 15

If the solar system was installed and paid for in 2022 you will receive a 30% tax credit for the solar system to include the cost of the installation.

The credit is a nonrefundable credit. If the credit exceeds your tax liability any remaining credit is carried forward to the next tax year.

Go to this website for more information - https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics

[Edited]

NCperson

Level 15

@DoninGA - unless the rules changed for the Inflation Reduction Act, I thought the solar credit carries over (it's the EV credit that doesn't carry over.) Please review line 12 of form 5695 for both 2021 and 2022.....the carryover is reflected. thoughts?

https://www.irs.gov/pub/irs-pdf/f5695.pdf

https://www.irs.gov/pub/irs-dft/f5695--dft.pdf

@john_vorwald - the solar credit will end up on Line 20 of Form 1040. In effect, Line 18 has to be higher than your solar credit (because Line 22 can not be less than zero) for you to capture the entire credit in one year. That is what is meant by the "non-refundable credit". The line numbers are the same for both the 2021 and 2022 form 1040. Take a look at your 2021 tax return and you;ll see how this works. Let's see what @DoninGA responds with.

DoninGA

Level 15

@NCperson Thanks for pointing that out. It was my mistake as I was thinking of the EV credit. The Residential Energy Efficient Property Credit for a solar system where the credit exceeds the tax liability, the remaining credit can be carried forward to the next tax year.