Form 3468 - Unable to get increased 30% tax credit for small solar system install

[andyoak]

I installed a small (<1 mw) solar panel system to a rental property.

In 2025 Turbotax Premier Online, I've added it as an asset under the rental property. Everything I'm reading says Turbotax should take me through an interview where it asks if it's a solar system that qualified for 30% credit, but it doesn't and there are no other options under "asset type" to indicate that it's solar. I've tried adding it under various asset types.

I've correctly entered a 2024 construction begin date and 2025 placed in service date, and 5 kW in both line 12a items.

Update: I spent another 1.5 hours with them and they continue to incorrectly insist that an <1 kw system still has to meet prevailing wage requirements and don't appear to be willing to investigate further. So I guess I'll need to redo our taxes in another product.

When I add an Investment Credit (Form 3468) and select 7a (<1 mw system) and 8d (prevailing wage not applicable), it only calculates 6% credit in Section VI even though those options should trigger 30%. I called Intuit and they insisted I have to answer 8a (subject to prevailing wage and meets requirements), but that triggers Form 7220 (to demonstrate that the prevailing wage requirements are met), and prevents e-filing.

Does anyone know how to fix this?

Thanks!

[andyoak]

I heard from another user that they've acknowledged this error but won't promise it'll be fixed by 4/15.

[andyoak]

Update: It's the solar credit in Part VI that's not working, which is where mine belongs as construction began in 2024. Part V does calculate the 30% (though apparently is only for "facilities" - not solar equipment on a building). However, it's still incorrectly requiring Form 7220 (explanation of how it meets prevailing wage requirements, which it's exempt from). 

[PatriciaV]

This is a known issue in TurboTax and we are working to resolve it as soon as possible. As soon as we have a resolution for you, we will update you in this Community thread.

[16Rally]

andyoak,

What you state here is exactly what I'm experiencing with my TurboTax 2025 tax preparation. Using Part V and selecting Part I, 7a and 8d, I'm getting tripped up in the no e-filing and Form 7220 requirement snare.

Although in this situation involving a <1mW system, a Form 7220 submission may not be necessary, at lease according to IRS instruction for Form 3468, a statement substantiating <1mW capacity must be attached!

I suspect this to be the real reason TurboTax is not allowing e-filing. It's just getting mislabeled as 'Form 7220 requirement'.

[andyoak]

@16Rally , In another thread,  @DawnC from TT states that this is a known issue (the Form 7220 requirement, and presumably the 30% calc not working in Section VI for solar panel systems) that they're working on, but that paper filing will still be required due to the attachment to certify that the system meets the 30% requirements due to being < 1 MW. Another user said they were told it may not be fixed until after 4/15.

However, Form 3468's instructions (for Parts II-VII) state that we can separately mail in that attachment using transmittal form 8453, so I'm really hoping that they follow that and allow e-filing:

If you are an individual and file electronically, you must send in a paper Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, if attachments are required for Form 3468.

[rockyInTheVoid]

I have found a workaround, not sure if it will create an issue or would trigger an audit. But if you remove the date from "Date Construction began" field (Part I, 4), it tricks the form to use 30% of the credit in Section VI.

Can the Turbotax support confirm this workaround?

[rockyInTheVoid]

Patricia, do you have an ETA on when this issue will be resolved. Everyone who install solar last year for their rental property is having this issue and preventing us from filing the return on time. This should be an easy fix.

[Wongeroo]

What does Intuit recommend users to do that need this very problem fixed to efile? Should we just mail the form without Form 7220 and it'll be ok given we're all in the same boat?

[andyoak]

@rockyInTheVoid Interesting. I'd think that's a required field, and so the filing wouldn't meet the IRS' e-filing specifications and so wouldn't go through. And if you filed on paper like that I'd think the IRS would come back with questions -- I think if you started the project too long ago it doesn't qualify.

I was thinking of filing on paper by putting the solar cost in Part V of form 3468 (so it would calculate 30%, or using your technique instead) then downloading and manually completing Forms 3800 and 3468 and slipsheeting those into the return before mailing. But I really hate to file on paper when I'm paying TurboTax for e-filing capability.

[PatriciaV]

According to our development team, they are close to resolving this issue. While we weren't given an estimate for the update release date, we recommend that you check this fairly often. Updates are being released nearly every night, in most cases without advanced notice.

@andyoak 

@rockyInTheVoid 

@Wongeroo 

[Wongeroo]

The tax filing deadline is next week. Do you recommend all of us that are in the same situation file for an extension and pay the estimated amount so we can wait for Turbo Tax to fix the problem for efiling?

I'm very opposed to mailing in my return since it is pretty big and would feel more secure if it can later be efiled if TurboTax accomodates asking for an extension and coordinates anticipated tax liabilities if I owe something.

[andyoak]

@PatriciaV Thanks for the update. Will that be for both Online and Desktop at the same time? Or do you prioritize the Desktop version?

[PatriciaV]

We anticipate the update will include all versions of TurboTax (Online and Desktop). However, if you'd rather not wait, you have a few options.

1. Request an extension of time to file and pay the estimated taxes (if any) that are shown on the return you have now. The final filing deadline for 2025 is October 15, 2026.
2. File your return now and amend after the software has been updated. IRS processing of amended returns could be delayed two to three months.
3. Use one of the workarounds presented in this thread and file now. You may hear from the IRS in the future regarding an incomplete form. This may or may not affect the tax liability per the IRS.

[user17757961921]

I'm having a similar issue when logging an entry for a solar credit.  In the Turbotax program is walks through entering the costs for Clean Energy improvements.  At one point the program insists I include a minimum .5 capacity entry for Fuel Cells.  I have nothing to report or do with fuel cells.  So clearly a bug in the program that won't let me progress, and this also gets flagged during the programs audit check.  Seems to be a bug in following through from solar energy right into fuel cell questions.  Ugh!  Please fix soonest.  Thanks.

P.S.  Wishing Intuit had a separate page for logging program problems.  Took me almost an hour to stumble across this topic to make this entry.  Should be a lot easier to report suspect program bugs.  Please fix this.