The tax credit for an individual who installs a solar energy device in taxpayer's residence located in Arizona
is a nonrefundable credit.
A nonrefundable credit essentially means that the credit can't be used to increase your tax refund or to create a tax refund when you wouldn't have already had one. In other words, your savings cannot exceed the amount of tax you owe.
Form 310 is available in TurboTax and ready for e-filing.
If you qualify for the credit, you can find Form 310 on AZ return under Other Nonrefundable Credits.
For more information check: azdor.gov
My understanding is that if my tax liability was say $500, a nonrefundable credit of $1000 would only result in bringing my tax liability to $0, instead of resulting in a refund of $500, right?
I don't think this form is calculating correctly in TurboTax. Please correct me if i'm wrong in the following example (numbers have been changed) of what I'm finding:
1. My tax liability prior to filling out 310 is $1500.
2. I had $2000 withheld for Arizona taxes.
3. I had solar installed in 2023 and qualified for a $1000 nonrefundable credit on my Arizona tax return.
4. Tax liability is then reduced from $1500 (1500-1000) to $500.
5. My refund should be 2000-500 = $1500, right?
Because that isn't happening when the 310 form is selected.
The scenario, as you describe it, is generally correct.
However, note that on Arizona Form 140, which can be found on the Arizona Department of Revenue's Individual Income Tax Forms page, the Family Income Tax Credit and the Dependent
Tax Credit will be applied to your tax liability first, if you're eligible.
If either of those credits are applied, they'll reduce or eliminate any solar credit you could claim for the year. And, if that's the case, any unused amount of the solar credit would be carried over to your next tax year.
The Credit for Solar Energy Devices is claimed on Form 310, and the total credit amount from that form is transferred to Form 301.
Line 32 of Form 301 applies any Family Income Tax Credit from Form 140, line 50, and any Dependent Tax Credit from Form 140, line 49, to your tax liability, before taking any other tax credits on Form 301 into account. So, your tax liability could be reduced or eliminated before your solar credit is applied.
If this isn't the issue that's affecting you, you might want to take a look at the Instructions for Form 310, which you can find on the Arizona Department of Revenue's Tax Credits Forms page, just to make sure that you qualify for the credit.
I'd also suggest you review your responses in the Solar and Wind Energy Devices portion of the Arizona interview in TurboTax.
Make sure that you answered the Compliance Certificate information and, if necessary, the Self-Installed Device information, appropriately in the TurboTax interview. According to the instructions linked above:
The person who sells you your solar energy device must furnish you with a certificate stating that the solar energy device complies with Arizona's solar energy device requirements. If you designed and installed the system yourself, you will not receive such a statement, but your solar energy device must meet the required criteria.
To review your information in TurboTax Online: