@DoninGA wrote:
Yes, your understanding is correct. If the credit reduces your tax liability to zero for the current tax year and all of the credit was not used then the remaining credit is carried over the the following tax years until it is all used up.
Caution: The Residential Clean Energy Credit (which covers solar power, geothermal, fuel cells, wind power, and certain biomass heating) will carry forward to the next year if your tax liability is not large enough to use the entire credit the first year.
However, the Energy Efficiency Home Improvement Credit (which covers efficient furnace, heat pump, air conditioner, doors, windows, insulation, and home energy audits) does not carry forward if it can't be used in the year the items are installed.
