We just filed our 2020 taxes. We have several kids, and the child tax credit completely wiped out our tax liability, and then some. We are considering installing Solar panels in 2021 and have a potential tax credit of around $7,000. However, I learned that the federal solar/energy tax credit is nonrefundable (won't bring our tax liability below $0). So, my question is, is the child tax credit or solar tax credit applied first?
It would be great if the solar tax credit was applied first, because then it could take our 2021 tax liability down to $0 effectively, and the refundable portion ($1,400) of the child tax credit would take us below $0. If the child tax credit is applied first, it would wipe out or tax liability, and bring us below $0, rendering the solar tax credit unusable.
So, again, my question is, is the child tax credit or solar tax credit applied first? Also, is my understanding about how the applicable scenario would play out correct?
