Home Energy Residential Clean Energy Credit (RCEC) is supposed to be non-refundable, but turbotax is counting it as refund!

Forum|Forum|3 months ago
March 2, 2026
1 reply
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The RCEC is worth 30% of your qualified expenses for property placed in service through December 31, 2025. If this non-refundable credit exceeds your tax liability for the year, the unused portion is beneficial because it can be carried over to offset tax owed in future years. For reference: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/how-taxpayers-can-claim-the-expiring-2025-home-energy-tax-cre[product key removed]/00/3711429

Before going through Home Energy section, I have tax due around 8k. After completing that section with numbers for Battery Technology, 30% of that is around 10k, so I expect my tax due for 2025 to be $0 (I can spread the remaining $2k credits into 2026 tax year). But Turbotax is turning that excess of credits into a refund! I am sure IRS will not agree.

TurboTax PLUS Online

Best answer by AnnetteB6

Expert Reviewed

The best reference is to look at your Form 1040 to understand how the credit is applied on your tax return. It is likely that the energy credit is being used in such a way that another credit you are also claiming on your return or your tax withholding is putting money toward your refund and it just appears that it is due to the energy credit. All of the tax credits are applied in a specific order in such a way that refundable credits can add to your refund, and non-refundable ones only reduce your tax liability. But sometimes, it can appear that you are getting a refund of a non-refundable credit when it is a different credit actually increasing the refund.

So, taking a look at your Form 1040, line 16 is your income tax amount based on your taxable income on line 15. Any additional taxes are added on line 17. Then, this amount of tax is reduced by child tax credit or credit for other dependents on line 19. Next, there is an amount reported on line 20 that comes from Schedule 3. This is where the energy credit is taken into account.

So if line 22 is still a positive number and not zero, all of the energy credit was used to reduce your taxes and there is nothing left to carryover to a future year. The amount on line 22 can then be further reduced by any refundable credits you are claiming as well as tax withholdings. The amount on line 22 can also be increased by self-employment tax from line 23, if applicable.

But, the bottom line is that the energy credit made the number on line 22 lower that it would have been otherwise and then the refundable credits and your withholdings paid the rest of your tax and there was more leftover for a refund.

To take a look at your Form 1040 to see the information referenced above, use the following steps:

For TurboTax Online, while working in your tax return:

In the navigation area on the left side of your screen, click Tax Tools to expand your choices
Click Tools, which will open the Tool Center
Click View Tax Summary under “Other Helpful Links…”
Click Preview My 1040 on the left side of your screen to see your actual tax form

If you are using one of the desktop versions of TurboTax, click the Forms button in the upper right corner of the screen to go to Forms Mode where you can view Form 1040 or any other form that is included as part of your return. Once you are in Forms Mode, click the form name in the list on the left side of the screen.

@fataxkc

M

MindyB

Level 13

It really depends on what your tax liability is, not what your tax due before entering the credit was. If your "tax due" was $8,000 before entering the battery credit, that figure actually represents your remaining tax balance after your employer-paid withholdings or personally made estimated payments were already applied. In this scenario, your total tax liability (the actual cost of your taxes for the year) is likely higher than $8,000. When you apply the $10,000 RCEC credit, it first eliminates the $8,000 payment that would have been due, then it continues to reduce the tax you already paid throughout the year.

If the tax liability before the payments is less than the credit, it can be carried forward.

F

fataxkcAuthor

Level 2

Thank you for prompt response. There are multiple independent sources that appear to describe this non-refundable credit that is different from your response (see below). The IRS doc below even says credit amount "can't exceed the amount you owe in tax." While I respect tax experts and their advice in this forum (and who does not like a refund from govt!) ... however, at the same time I really do not want deal with IRS tax audit either! So please help me understand your explanation with some supporting documentation. Thank you.

IRS: https://www.irs.gov/credits-deductions/residential-clean-energy-credit

"The credit is nonrefundable, so the credit amount you receive can't exceed the amount you owe in tax. You can carry forward any excess unused credit, though, and apply it to reduce the tax you owe in future years."

Nerd Wallet: https://www.nerdwallet.com/taxes/learn/energy-efficient-home-improvement-credit

"The energy efficient home improvement credit is nonrefundable, and you can’t put any leftover credit toward a future tax bill. A nonrefundable credit lowers your tax bill by your credit amount, but if it dips your tax bill below zero, you won’t get the excess credit back as a tax refund."

A

AnnetteB6Answer

Level 15

Expert Reviewed

The best reference is to look at your Form 1040 to understand how the credit is applied on your tax return. It is likely that the energy credit is being used in such a way that another credit you are also claiming on your return or your tax withholding is putting money toward your refund and it just appears that it is due to the energy credit. All of the tax credits are applied in a specific order in such a way that refundable credits can add to your refund, and non-refundable ones only reduce your tax liability. But sometimes, it can appear that you are getting a refund of a non-refundable credit when it is a different credit actually increasing the refund.

So, taking a look at your Form 1040, line 16 is your income tax amount based on your taxable income on line 15. Any additional taxes are added on line 17. Then, this amount of tax is reduced by child tax credit or credit for other dependents on line 19. Next, there is an amount reported on line 20 that comes from Schedule 3. This is where the energy credit is taken into account.

So if line 22 is still a positive number and not zero, all of the energy credit was used to reduce your taxes and there is nothing left to carryover to a future year. The amount on line 22 can then be further reduced by any refundable credits you are claiming as well as tax withholdings. The amount on line 22 can also be increased by self-employment tax from line 23, if applicable.

But, the bottom line is that the energy credit made the number on line 22 lower that it would have been otherwise and then the refundable credits and your withholdings paid the rest of your tax and there was more leftover for a refund.

To take a look at your Form 1040 to see the information referenced above, use the following steps:

For TurboTax Online, while working in your tax return:

In the navigation area on the left side of your screen, click Tax Tools to expand your choices
Click Tools, which will open the Tool Center
Click View Tax Summary under “Other Helpful Links…”
Click Preview My 1040 on the left side of your screen to see your actual tax form

If you are using one of the desktop versions of TurboTax, click the Forms button in the upper right corner of the screen to go to Forms Mode where you can view Form 1040 or any other form that is included as part of your return. Once you are in Forms Mode, click the form name in the list on the left side of the screen.

@fataxkc

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