Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
nepobon
Level 1

Hi, Can I claim Solar & EV tax credit in the same tax year?

I have installed solar system in 2022 and planning to purchase an EV so I would like to know before I finalize my EV purchase.
1 Best answer

Accepted Solutions
NCperson
Level 15

Hi, Can I claim Solar & EV tax credit in the same tax year?

@nepobon - I appreciate you just received two conflicting responses..... @Critter-3 is correct and I've tested it on a dummy tax return to prove it.   The EV credit gets consumed first as it is 'use it or lose it' in the current tax year.  The solar credit that can't be used is carried over to the next year. 

 

More specifically, look at Line 18 of Form 1040 (and let's assume the line numbers will be the same in 2022).  Line 18 is your tax liability and the credits can be used to reduce this number to  no less than zero.  In other words, Line 22 can't be less than zero. 

 

First, the EV credit is used to reduce Line 18.  If line 18 is less than the EV credit, you lose the rest of the EV credit as it can't be carried over to the next year.

 

Then, the Solar credit is used to further reduce Line 18 (less the EV credit)  to no less than zero.  Whatever can not be used is carried over to the next year and the next year and the next year, etc. until it is consumed. 

 

if you have children, this is where @Critter-3 's comment about 'it could get interesting' comes into play.  Unlike 2021, up to $600 per child of the child tax credit also is used to reduce Line 18 and that credit is also 'use it or lose it' in the current year.  So with children, whatever is on Line 18 is going to be reduced by up to $600 per child in any event in 2022.  it is very complicated

View solution in original post

6 Replies
Mike9241
Level 15

Hi, Can I claim Solar & EV tax credit in the same tax year?

yes you can. but your tax liability has to be high enough to utilize both credits.  the solar credit is used first then the EV credit so if you don't have a large enough tax liability the excess EV credit is permanently lost while if there is a remaining unused Solar credit it can be carried forward.

 

in the following year, the same rule would applies. first, any carry forward of solar credits is used, and then if you buy a vehicle qualifying for the EV credit that is used to the extent of any remaining tax liability. any excess EV credit is lost.

 

this assumes the purchase of the EV is personal and there are no other tax credits. 

 

Critter-3
Level 15

Hi, Can I claim Solar & EV tax credit in the same tax year?

Yes you can use them both  on any federal tax liability ( not SE taxes or other penalties)  however the EV credit is used first because the unused portion  cannot be carried forward like the solar credit can.   If you have other non refundable credits those will also be taken into consideration as well so it can get a bit interesting.   If your tax bill will not be enough to use up the credits in full then planning a way to increase your income is a wise decision ... like converting a 401K or IRA to a roth. 

NCperson
Level 15

Hi, Can I claim Solar & EV tax credit in the same tax year?

@nepobon - I appreciate you just received two conflicting responses..... @Critter-3 is correct and I've tested it on a dummy tax return to prove it.   The EV credit gets consumed first as it is 'use it or lose it' in the current tax year.  The solar credit that can't be used is carried over to the next year. 

 

More specifically, look at Line 18 of Form 1040 (and let's assume the line numbers will be the same in 2022).  Line 18 is your tax liability and the credits can be used to reduce this number to  no less than zero.  In other words, Line 22 can't be less than zero. 

 

First, the EV credit is used to reduce Line 18.  If line 18 is less than the EV credit, you lose the rest of the EV credit as it can't be carried over to the next year.

 

Then, the Solar credit is used to further reduce Line 18 (less the EV credit)  to no less than zero.  Whatever can not be used is carried over to the next year and the next year and the next year, etc. until it is consumed. 

 

if you have children, this is where @Critter-3 's comment about 'it could get interesting' comes into play.  Unlike 2021, up to $600 per child of the child tax credit also is used to reduce Line 18 and that credit is also 'use it or lose it' in the current year.  So with children, whatever is on Line 18 is going to be reduced by up to $600 per child in any event in 2022.  it is very complicated

nepobon
Level 1

Hi, Can I claim Solar & EV tax credit in the same tax year?

Hi,

thanks for the details feedback! How about if I base on line 33 on 1040 is higher than expected credit for solar and EV then should expect the full credit in the same year… like 2023 right?

Critter-3
Level 15

Hi, Can I claim Solar & EV tax credit in the same tax year?

NO ... line 33 is immaterial to the use of the credit ... you must look at line 18.  Anything that happens after line 18 doesn't affect how the credit will be used. 

nepobon
Level 1

Hi, Can I claim Solar & EV tax credit in the same tax year?

Go it. Thanks!

Dynamic AdsDynamic Ads
Privacy Settings
v