TurboTax determines whether you're able to take the entire in one year or if you have to spread it out over current and future years. It's based on your tax situation.
- As a credit, you take the amount directly off your tax payment, rather than as a deduction from your taxable income. Other than the cost of the system, there's no limit to the dollar amount of the credit. For example: If you end up with a bigger credit than you have income tax due—a $3,000 credit on a $2,500 tax bill, for instance—you can't use the credit to get money back from the IRS.
- Instead, generally, you can carry the credit over to the following tax year.
- However, it is not yet clear whether you can carry unused credits to years after the solar credit expires.
To claim the credit, you must file IRS Form 5695 as part of your tax return; TurboTax calculates the credit on the form, and then enters the result on your 1040.
Under the Residential Energy Efficient Property Credit, you can get a federal tax credit for installing alternative energy equipment, such as solar electric property, solar water heaters, geothermal heat pumps, small wind turbines, and fuel cell property.
- If you made energy efficient improvements to your home like energy-saving roofs, windows, skylights, and doors, you'll be able to claim the Nonbusiness Energy Property Credit for 10% of amounts paid for qualified energy efficiency improvements, up to a lifetime cap of $500 or fixed dollar amounts ranging from $50 to $300 for energy efficient property, including furnaces, boilers, biomass stoves, heat pumps, water heaters, central air conditioners, and circulating fans.
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