1099-NEC and Clean Energy Tax Credit

[katik2123]

Hello,

I installed solar panels at my residence in 2023 and am eligible for up to $13k in federal tax credits as a result.  I began doing instacart as a side hustle in 2024 and am wanting to be proactive about planning for the taxes I’ll owe for that income.   How can I determine what amount I’ll owe (an estimate) when taking my tax credit into consideration as well?  Thank you!

[Vanessa A]

The Residential Energy Credit is a non-refundable credit, however this one can be carried forward to future tax years until this credit goes away which is currently set to happen in 2034. This credit is worth up to 30% of the cost of the equipment, with no maximum limit. 

The credit being non-refundable means you must have enough tax liability in order to use up the credit.  If you do not have enough liability, you will not get the credit, but it can be carried forward. 

Your instacart income will be considered self-employment income so you should make quarterly estimated payments on this income.  SE taxes are 15.3% of your SE income.  Non-refundable credits do not offset these taxes, so even if you would get the solar credit of $10,000, you still could in some cases need to still pay in.  

Taking Business Expense Deductions

[katik2123]

Thank you.

What about quarterly taxes…I have earned roughly $6700 between 1/1-today and plan to earn approximately $150 weekly going forward. Does this indicate I should file quarterly taxes or can I wait to fill like normal along with my W-2 from my full time job?  I was thinking that the credit I get as a head of household claiming a dependent with the energy credit would make it so that I end up not actually owing the IRS anything for my 1099-NEC and may still end up with a small refund?

[Vanessa A]

No, you should file quarterly taxes to cover the 15.3% on your SE Income.  If you wait to pay until you file your tax return with your W-2 next year, you may owe a underpayment penalty.  You can have an extra amount withheld on your regular pay by changing your W-4 with your employer. So if you are paid weekly and plan to make $150 a week you could have an extra $20 withheld from your wages to avoid having to pay quarterly.  However, you should still make the first quarterly payment. 

[katik2123]

Thank you again.

Am I able to file quarterly through Turbo Tax?  This is new for me, so any guidance or links to helpful information around filing quarterly is appreciated!

[DawnC]

You can use TurboTax to generate vouchers for your estimated tax payments.   Once you have the vouchers or know the amounts, you just remit the payments to the IRS each quarter.

You can enter your expected income and deductions in TurboTax or Tax Caster to get a feel for 2024's taxes.   In TurboTax, you can go through the estimated taxes for next year section.   If you already filed your return, you will need to click on Add A State at the bottom of the home page to access your return.    You can do this for your federal taxes and your state taxes, if applicable.  

Estimate next year's federal taxes

Estimate next year's state taxes