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aivonna7
New Member

Good morning. We have over 10,000 in carryover solar tax credits from installing solar in 2022. Despite having this credit, we are still liable for $834. Why is that?

I have a w-2 with $1105 of federal tax withheld and my husband has $14,000 of taxable income after his deductions from his business. The software is only allowing us to use about $753 from the investment tax credit. That leaves us on the hook for $834. I thought this credit was supposed to reduce tax liability to zero. We are filing jointly since he is the only owner of his LLC.
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1 Reply
ThomasM125
Expert Alumni

Good morning. We have over 10,000 in carryover solar tax credits from installing solar in 2022. Despite having this credit, we are still liable for $834. Why is that?

Most likely the tax you owe isn't income tax, it is self-employment tax associated with your spouse's business income. The energy credit is limited to the amount of your income tax, but it cannot be used to reduce your self-employment tax, as that gets paid into your social security account and reserved for your retirement someday.

 

If you look on line 4 of schedule 2 of your form 1040 you will see your self-employment tax. If you look on line 18 of your form 1040 you will see your income tax. Your energy credit can't be more than that amount. So, you can max out your energy credit and still owe taxes.

 

To view your form 1040 and schedule 1 to 3:

 

  1. Choose Tax Tools from your left menu bar in TurboTax Online
  2. Choose Tools
  3. Choose View Tax Summary
  4. See the Preview my 1040 option in the left menu bar and click on it
  5. Choose the Back option in the left menu bar when you are done 
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