Solar Panel Credit

[stfembry]

Am I able to take the full 26% tax credit for solar panels installed in 2020 or do I have to take the credit over a four years. I was under the impression that I would get the full amount once I filed my taxes but Turbo Tax is only letting me take about 1/4th of it this year. Is that correct?

[AnnetteB6]

You can claim the full amount on your 2020 tax return by entering the total cost if that is the year they were installed, but the credit is not a refundable credit.  Therefore, you must have a tax liability in order to claim the credit.  Any unused credit will be carried forward to a future year as long as the solar energy credit is still in effect.  

Take a look at the following TurboTax article to learn more:  Federal Tax Credit for Residential Solar Energy

[stfembry · Accepted solution]

Is your tax liability Line 16 on the 1040 form? How is your tax liability determined? I have tried to research it but there is a lot.

[BillM223]

It uses your tax liability from line 18 on the 1040 net of a number of credits (which take precedence over this energy credit)..

You can see this, if you would complete the Residential Energy Efficient Property Credit Limit Worksheet—Line 14 in the Instructions for form 5695.