Hi, Can I claim Solar & EV tax credit in the same tax year?

I have installed solar system in 2022 and planning to purchase an EV so I would like to know before I finalize my EV purchase.

State tax filing

yes you can. but your tax liability has to be high enough to utilize both credits.  the solar credit is used first then the EV credit so if you don't have a large enough tax liability the excess EV credit is permanently lost while if there is a remaining unused Solar credit it can be carried forward.

 

in the following year, the same rule would applies. first, any carry forward of solar credits is used, and then if you buy a vehicle qualifying for the EV credit that is used to the extent of any remaining tax liability. any excess EV credit is lost.

 

this assumes the purchase of the EV is personal and there are no other tax credits. 

 

State tax filing

Yes you can use them both  on any federal tax liability ( not SE taxes or other penalties)  however the EV credit is used first because the unused portion  cannot be carried forward like the solar credit can.   If you have other non refundable credits those will also be taken into consideration as well so it can get a bit interesting.   If your tax bill will not be enough to use up the credits in full then planning a way to increase your income is a wise decision ... like converting a 401K or IRA to a roth. 

State tax filing

@nepobon - I appreciate you just received two conflicting responses..... @Critter-3 is correct and I've tested it on a dummy tax return to prove it.   The EV credit gets consumed first as it is 'use it or lose it' in the current tax year.  The solar credit that can't be used is carried over to the next year. 

 

More specifically, look at Line 18 of Form 1040 (and let's assume the line numbers will be the same in 2022).  Line 18 is your tax liability and the credits can be used to reduce this number to  no less than zero.  In other words, Line 22 can't be less than zero. 

 

First, the EV credit is used to reduce Line 18.  If line 18 is less than the EV credit, you lose the rest of the EV credit as it can't be carried over to the next year.

 

Then, the Solar credit is used to further reduce Line 18 (less the EV credit)  to no less than zero.  Whatever can not be used is carried over to the next year and the next year and the next year, etc. until it is consumed. 

 

if you have children, this is where @Critter-3 's comment about 'it could get interesting' comes into play.  Unlike 2021, up to $600 per child of the child tax credit also is used to reduce Line 18 and that credit is also 'use it or lose it' in the current year.  So with children, whatever is on Line 18 is going to be reduced by up to $600 per child in any event in 2022.  it is very complicated

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State tax filing

Hi,

thanks for the details feedback! How about if I base on line 33 on 1040 is higher than expected credit for solar and EV then should expect the full credit in the same year… like 2023 right?

State tax filing

NO ... line 33 is immaterial to the use of the credit ... you must look at line 18.  Anything that happens after line 18 doesn't affect how the credit will be used. 

State tax filing

Go it. Thanks!

State tax filing

Hello,

what if my line 18 is not zero but i still want to carry forward some portion of the solar credit? Is it possible? Thanks so much

RobertB4444
Expert Alumni

State tax filing

The solar credit reduces line 18 to as close to zero as possible.  So if your line 18 is $000 and your solar credit is $3000 then you will reduce your tax liability to $1000 and there is no solar credit to roll forward.  If your line 18 is $2000 and your solar credit is $3000 then your line 18 is reduced to zero and $1000 rolls forward.

 

If your question is "can I choose not to use all of my solar credit this year and save some for next year even though I still owe taxes for this year?" then the answer is no.  You have to use as much as possible this year and then - if there is any left - it will roll over.

 

@ozturkender 

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