DawnC
Expert Alumni

Deductions & credits

Any withholding over the amount of your tax liability will be refunded.  Maybe this is an easier explanation - Nonrefundable credits can't reduce your tax liability past zero.   Look at your Form 1040, line 18, that is your tax liability.   Your credits reduce this amount.     Your withholding has nothing to do with the tax credit amounts you are allowed to claim.   

 

And although the solar credit is nonrefundable, it does carry over, so any amount you can't use this year (to reduce your tax to zero) will be carried over to future years.   Enter your geothermal expenses on Form 5695 and then review your Form 1040.    On Form 5695, your solar tax credit you can take this year is on Line 15 and the amount you can carry to next year is on Line 16.  

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