Hi, in 2019 we installed solar panels. Cost $30K. ITC $9K. I paid my yearly tax liability through pay check deductions. Without the ITC I get a refund since I make additional Federal tax payments every month. I never owe taxes. My fed refunds go from $3K-$5K. How will the ITC of $9K be applied in 2019?
Will the $9K be applied to my 2019 tax liability and then I will get a refund of all the taxes I paid through my pay check? I'm a little clueless. Thanks.
Yes the tax credit will be applied to your tax liability.
If your credit is $9K and your tax liability is $6K you will have a credit carryover of $3K
You will also get a refund of the taxes you paid in.
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Just to add to this, a perk of using turbo tax is that it will remember your carryover. I did solar 5 or 6 years ago. I got the ITC in bits and pieces over the next 3-4 years, but every year, turbo tax knew it had to pull the form for it and knew what the carryover balance from the previous year was. Just a little something to make life easier.