Claiming Electric Vehicle Tax Credit and Solar Tax Credits in the same year

[kesava-chunduri]

Hi - I am getting mixed responses on this. So, wanted to check what is true.

I am eligible for a Federal tax credit of $7500 as I purchased an Electric Vehicle this year.

I am now going Solar and I see that the ITC Federal tax credit will be $7800 per the solar quote from the solar company I am going with.

I understand that Electric Vehicle tax credit CANNOT be carried forward to next year.

I also understood that Solar tax credit CAN be carried forward to next year.

But, when I claim both of them in the same year, what happens?

For ex:

I am eligible for $15,300 Federal Tax credit this year (based on EV and Solar Tax Credits).

But, If I totally owe $10,000 (just an example) as my total family Federal taxes in 2022; will I be able to claim all that $10,000 this year ($7500 EV tax rebate + $2500 Solar for this year) and carry forward the balance Solar tax credit $5,300 ($7800 - $2500) to next year?

If not, how does that work? Please suggest. Thank you!

[Critter-3 · Accepted solution]

The EV credit is taken first since it is not allowed to be carried forward then the solar credit is taken ... the program will do this for you automatically. 

[NCperson · Accepted solution]

@kesava-chunduri - just so it's clear, the "tax you owe" is line 18 of Form 1040.  it has nothing to do with whether you are due a refund or owe at the end of the year.  Focus on Line 18 of Form 1040.   Line 18 (tax liaibility) less Line 20 (these credits) can reduce Line 22 to  as low as zero, but not below zero.  Look at Form 1040 and you'll see what I am talking about. 

edited response: I set up a dummy tax return and the EV credit does get consumed before the Solar credit. 

[kesava-chunduri]

Hi @Critter-3 and @NCperson - Thank you so much guys for your quick response. Really appreciate it.

But, 1 quick question if you don't mind me asking, how sure are you about this? Because I've been getting mixed responses and I found another thread Turbo-tax thread from 2019 (link below) where the same question has been marked, but best answer marked was the other way? So, just wanted to recheck, if your answer is based on your experience or a guess? 

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/i-understand-how-the-tax-credit-...

Edited Response: 

@NCperson - My bad, you mentioned that you did a dummy tax return and confirmed that EV credit was taking in first. Probably whatever @Critter-3 mentioned (EV tax credit goes first) as It cannot be carried forward to next year.

Thank you so much!

[NCperson]

@kesava-chunduri - All I can state is that I set up a dummy tax return to test it....and sure enough the EV credit was totally consumed and the Solar credit created a carry over.

you are welcome to do the same thing to test it for yourself. 

[Critter-3 · Accepted solution]

30 years in the business + 8 years of teaching the income tax course + I can read the form instructions  =  a correct answer.   Of course if you also have other non refundable credits in 2022 then those will also come into play but the EV credit is always used first.