Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

[NCperson]

https://turbotax.intuit.com/tax-tips/going-green/federal-tax-credit-for-solar-energy/L7s9ZiB4D

Filing requirements for the solar tax credit

To claim the credit, you must file IRS Form 5695 as part of your tax return. You'll calculate the credit on Part I of the form, and then enter the result on your 1040.

• If in 2021 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 tax year 2022.
• If you failed to claim the credit in a previous year, you can file an amended return.

[jspanos85]

OK so forgive me for being redundant, but this only tells me I can carry over remaining credit to a year that the program is in effect? IT doesn't mention anything about carrying over credit past the EXPIRATION date of 1/2024? Please forgive me ignorance- I'm truly looking for some objective answers to this. From what you just posted, I can only infer that I'm able to carry over credit without issue RIGHT NOW while the program is still active. My concern is after the expiration of 2024. I will still have remaining credit at that point. Thank you!!

[NCperson]

@jspanos85 - unfortunately, you are asking me to prove something that does not exist.  I can only prove what does exist.  

 If the IRS was going to sunset your ability to take advantage of the carryover credits, wouldn't one think that would have put that in writing already?  Why would they surprise people later and say their tax carryover credits are worthless? 

For example, for electric vehicle tax credits - they are VERY clear, you can not carry over unsed tax credits to the next year.  For residential energy credits, they don't state that - don't you think they would if it were so? Otherwise, why the inconsistency? 

Lastly, how many years are you expecting to take these credits?  the solar credits will reduce your tax liability on Line 22 of Form 1040.  Line 22 can't go below zero, which is what creates the carryover.  

[jspanos85]

Thank you for that post- it was exactly what I needed to understand. To answer your question, I am installing solar int he next 3-4 months and I don't see them giving us PTO (permission to operate) until 2023. At that point, I can start claiming the credit. I will have over $15,000 of credit but we only have a liability of 6k (approximately) which will take around 2.5 years to exhaust. 

[louvallee]

This appears to be the position of the IRS as of today. There is no set time frame. However, the 2022 form 5695

has a line to rollover the excess credit from 2021. If precedent is any indication the rollover should be available through 2034 when the program expires. 

The IRS hasn’t announced new rules on this yet, but in the past the federal solar tax credit could be carried over for as many years as the incentive was active. The Residential Clean Energy Credit is active until 2034, so if you install in 2022, you’ll likely have plenty of time to use it over several tax years.

[louvallee]

This appears to be the position of the IRS as of today. There is no set time frame. However, the 2022 form 5695

has a line to rollover the excess credit from 2021. If precedent is any indication the rollover should be available through 2034 when the program expires. 

The IRS hasn’t announced new rules on this yet, but in the past the federal solar tax credit could be carried over for as many years as the incentive was active. The Residential Clean Energy Credit is active until 2034, so if you install in 2022, you’ll likely have plenty of time to use it over several tax years.

[cymccorm]

I have read you can carry the credit back 3 years. Is this true?

[DoninGA]

---

@cymccorm wrote:

I have read you can carry the credit back 3 years. Is this true?

---

No.  A solar credit can only be carried forward, not back.

[AmeliesUncle]

The solar credit for your personal home can not be carried back.

The solar credit for businesses and rentals so have a carryback (I think it is only one year though).

[RobertB4444]

An unused business solar property credit for property put into service in 2023 (or later) can be carried back 3 years and forward 22 years.

For solar property put into service in 2022 and back the credit can be carried back one year and forward 20 years.

Here's the DOE docs on that.

@cymccorm 

[cymccorm]

That is what I thought. Thank you.

To carry back the credit you just amended prior year 2021. We would just put in the whole solar expense to have the system create the whole credit. Then carry the credit forward to 2022 and file 2022. Correct? 

[AmeliesUncle]

---

@cymccorm wrote:

That is what I thought. Thank you.

To carry back the credit you just amended prior year 2021. We would just put in the whole solar expense to have the system create the whole credit. Then carry the credit forward to 2022 and file 2022. Correct? 

---

No.  If the business solar was "placed in service" in 2022, it is claimed on your 2022 return.  If any of the credit is unused on your 2022 return, then that unused amount is carried back.

[PattiF]

Yes, that is correct. You would amend the prior year and carry forward the credit until it is all used. 

@cymccorm 

[cymccorm]

What form do you use to carry it back to the 2021tax return? I feel like I have to carry back the credit before filing the 2022 return because it changes the carry forward from 2022 to 2023.

[AmeliesUncle]

The solar business credit on Form 3468 goes to the business credit Form 3800.  On your 2021 return, line 5 of Form 3800 will show the carryback.  I am unsure how that is entered in TurboTax.

I suspect that TurboTax won't automatically carry it anywhere, so if the business credit is not used up in 2022 or 2021, then you probably need to manually enter the carryover in 2023.