Can i use the solar credit if i get a refund back?

[greatone125mb]

I get a tax refund every year and this year I got solar at my home.  The big selling point is the tax credit but all the info I see on this is for people who owe taxes every year.  I don't ever owe, and I always get a refund so will the tax credit benefit me at all?

[CalCountry]

The solar credit is a "nonrefundable" tax credit, which means you won't receive any benefit if you already receive a tax refund.  There's an interesting (unofficial) overview of the solar credit process at:
   http://solaroutreach.org/wp-content/uploads/2015/03/ResidentialITC_Factsheet_Final.pdf

[greatone125mb]

Ok since the tax credit does not benefit because I receive a refund, will it roll over until a year that I actually may owe?

[CalCountry]

Yes, unused credit can be carried forward.  See the above web site above, and the IRS instructions for form 5695 at:
   <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i5695.pdf">https://www.irs.gov/pub/irs-pdf/i5695.pdf</a>

[SteamTrain]

Are you sure Cal?

I'm far from an expert on Solar Credits...but on my test tax return, a solar electric system carried over 3600, of a 12,000 system.  (line 16 of the form 5695)  

State credits might be different, but at least for the current Federal form, it shows a credit carry-forward.   (as long as you fill out the form in the year of installation)

[CalCountry]

Ooops.  We were typing at the same time.  See my revised comment above.

[SteamTrain]

Bingo...;.it's the AC/Heat-Window-door-roofs that don't carry.

@greatone125mb ...Some of the credit might be used even if you get a refund.

There are subtleties to that.  IF your tax liability is zero on line 47 of your Form 1040, then all of the credit carries forward to future year(s)....but if line 47 has a $$ value, then some, or all of the credit  of it might be used.  Some non-carryover non-refundable credits will be used up first, if your file has any of those.

Simplistically, if you get a refund isn't necessarily indicative of a full carryover...but if you already get a FULL refund of all your Federal pre-paid taxes and withholding...then there will likely be a full credit carryforward.

[uherrick]

A little late to the party, but....

If you have any tax withheld during the year, you will definitely benefit from the solar credit.  The credits will offset what you owe, before accounting for the withholding.  If your computed tax, based on your taxable income, is less than the credits then:

1. your taxes will be zero and all your withheld amount will be refundable and

2. any solar credits in excess of the computed tax will be carried forward. 

This is looking only at the solar credit.

[Mike9241]

@uherrick if you already filed the 2020 return you're going to have to file an amended return after the original is fully processed unless the IRS rejects the return. if the 2020 return is rejected you can fix and resubmit. 

[jessec3]

Thanks uherrick. I received a refund last year and my solar credits were applied. The key was, I owed money before the tax calculation.  I looked all over for the answer and yours was spot-on.