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skcherni
New Member

Non refundable solar and adotion credit

In all my reading it states that Solar and Adotion credits are non refundable.  And, you only get a credit amount up to your tax liability.  When I enter the information into Turbo Tax... the result is a large refund, with some carryover to the next year.  How can that be if it is non refundable. 

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2 Replies

Non refundable solar and adotion credit

Solar can carryover...they just can't take your tax liability below zero.

You still get to have your prior withholding refunded.

 

"Adoption" ?   Don't know if those can carryover

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
DawnC
Employee Tax Expert

Non refundable solar and adotion credit

You must have had enough tax liability to use most of the credit.   Preview Form 1040    look on Line 18 - that is your tax liability before child credits.   If there is any tax liability left over there, you can see them being applied on Schedule 3, Line 5 (energy credit) or Line 6 (adoption credit).    

 

Non-refundable credits can't take your tax liability past $0.   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.   You had withholdings that could still be refunded, but your refund is not more than your withholdings.   A refundable credit allows you to get more refunded than you had withheld.   

 

In other words, your savings cannot exceed the amount of tax you owe. For example, on your 2023 tax return, if the only credit you’re eligible for is a $500 Child and Dependent Care Credit, and the tax you owe is only $200—the $300 excess is nonrefundable. This means that the credit will eliminate the entire $200 of tax, but you don’t receive a tax refund for the remaining $300. For 2021, the Child and Dependent Care Credit is fully refundable so not only would you reduce your tax to $0, you would be eligible for a $300 refund.

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