topic Residential Clean Energy Credit in Tax law changes

Residential Clean Energy Credit

rch4013 — Sat, 28 Jan 2023 22:16:13 GMT

I completed form 5695 in TurboTax and for some reason it is treating my solar project costs as a refundable credit instead of offsetting against my tax liability.

Can anyone help guide me to where I made my error?

Thank you

Re: Residential Clean Energy Credit

AmyC — Tue, 31 Jan 2023 19:50:51 GMT

Form 5695 is reported on sch 3, part 1, line 5, nonrefundable credits. It is reported on the 1040, line 20 and subtracted from your tax liability.

Refundable credits come into play when your tax liability has zeroed out. You are correct, you should not see 5695 credits as refundable.

Can you clarify what you are seeing that is different from what I listed above?

Re: Residential Clean Energy Credit

rch4013 — Sat, 11 Feb 2023 19:52:00 GMT

Thank you, Amy -

I have completed form 5695 for the solar panel project and it has calculated the 30% number for the tax credit.

Schedule 3, part 1, line 5 has this amount.

This amount is also on line 20 of Form 1040.

However, for some reason Turbo Tax is treating it as a refundable credit instead of reducing my tax owed to $0 from the credit.

I must be missing something...

Thank you for your help.

Re: Residential Clean Energy Credit

rch4013 — Sat, 11 Feb 2023 20:24:48 GMT

I think I figured it out and I think TT is correct.

If my total tax from Line 18 of the 1040 is $10,000 and 30% of my solar project is $5,000, then my tax liability on Line 22 would be $5,000.

With that in mind, if I already paid $10,000 in tax over the course of the year 2022 (Line 25d), then I would get the full $5,000 for the solar project.

Is this correct?

Re: Residential Clean Energy Credit

JulieS — Mon, 13 Feb 2023 13:08:59 GMT

Yes, that is correct. Even though the energy credits are non-refundable, they can reduce your tax and allow you to get a bigger refund, as long as you have payments, that is tax withheld, estimated tax paid or refundable credits.