HELP NEEDED re: Solar Tax Rebate

[HIMichelle]

We had whole-house solar installed for $66k in February 2022 with the promise from the solar company that we would receive a federal tax credit of $17k and a Hawaii state credit of $10k. (We also installed skylights $2400 and a new energy-conserving roof $11k in materials which increases our proposed energy credits.) We made $74k last year and paid $5k in federal taxes. We were depending on the full tax credits this year, but I keep getting only $5k back for federal with a carryforward of $17k in 2023. Nothing for state.

I contacted the solar company and they said that doesn't sound right.

From what I've read, we can only get back what we paid in taxes. Is this true? Is there any way around it so we can get the full credits that we were promised THIS YEAR? It is the only way we could afford solar in the first place. We need to pay off credit card debt and we don't want to keep paying interest for another year.

[KrisD15]

For Tax Year 2022, the credit is NON-REFUNDABLE meaning it can only reduce your tax liability. 

Once that happens, if there is remaining credit, it is carried forward to the next tax year. 

EXAMPLE 

• If in 2022 you end up with a bigger credit than you have income tax due — a $3,000 credit on a $2,500 tax bill, for instance—you can't use the credit to get money back from the IRS. Instead, you can carry the credit over to the following tax year.

[HIMichelle]

Thank you for your reply. I don't understand the non-refundable part. Was it the same in 2021? Will it carry forward each year until we have received the full $17k back?

What about State? I'm showing a $0 credit there and it was supposed to be $10k.

[KrisD15]

Hawaii Form N-342 is scheduled to be available in TurboTax 02-02-2023.

It looks like the credit is up to $5,000 and is non-refundable with an option to have the credit refundable (with restrictions) see page 3 on the linked document below 

Here is a link with more information about Form N-342

"HOW TO TREAT THE TAX CREDIT NONREFUNDABLE: 

A nonrefundable credit means your credit will be applied towards the amount of income tax you owe. If your nonrefundable credit is greater than the amount of income tax that you owe, then you may carryover the remaining credit and apply it towards next year’s income tax. You may continue to carryover the credit until it is used up. 

REFUNDABLE (IRREVOCABLE): You may make an irrevocable election to claim the credit as refundable. A refundable credit means you will receive a tax refund if your credit amount is greater than the amount of income tax you owe. You may elect to claim the credit as a refundable credit under the following circumstances:

Reduced Credit For a solar energy system, such as a solar water heater or PV system, you must reduce the credit amount by 30%, unless you meet the conditions described in the “Full Credit” paragraph below. Full Credit For a solar or wind energy system, you may claim the full credit as a refundable credit if you are an individual taxpayer and any of the following apply: (1) All of your (and your spouse’s) income is retirement income such as pension distributions, social security, or distributions from a public retirement system that is exempt from Hawaii income tax; or (2) Your Hawaii adjusted gross income (AGI) is $20,000 or less ($40,000 or less if you are married filing a joint return)."