Deductions & credits

You can safely file your tax return.  A Solar Energy Tax credit is a nonrefundable credit.  30% for those installed before December 31, 2019. The credit decreases to 26% for systems installed in 2020 and to 22% for systems installed in 2021.    If your system cost 31K, then you are due a tax credit on this tax return of ~8K (26%).   You can take the full credit as long as your tax liability is more than the credit (check line 18 of form 1040).   

After you enter the credit, you should see a screen that tells you how much credit you qualify for (8K) how much, if any, will be carried forward to next year.   See image below.  In my example (31K solar system installed in 2020), my tax liability was only $6,185, so the remainder is carried over to 2021.   You can view Form 5695 to see how the credited was calculated and also see the amount applied to this year's taxes and how much gets carried over.  

Tax credits, dollar-for-dollar, reduce the amount of taxes you owe. If you claim more credits than you owe in taxes, you may end up owing nothing, and in certain situations, getting additional money back.   But in your situation, you have no credit left to take next year since you are getting the full credit now.    @jmh_in_hnl    @Joanne-hogle