If I receive a refund at the end of the year, will I get the credit from installing solar added to my return? If not then I how can I recoup the credit that is earned from the solar install?
The way it was explained to me today by a solar salesman is that the 30% credit is credited toward your tax liability, but only up to your taxable amount each year. Here's an Example (plug in your own numbers):
Your solar system costs $20,000. 30% of that is $6,000 - this is your total tax credit.
Let's say your Tax ends up being $4,000 for the year that your solar was installed, but $4,500 was withheld (leaving you with a refund of $500).
You can only take up to your $4,000 tax liability as a solar credit in your first year, because you cannot use more of the credit than what you owe in taxes. so the remaining $2,000 will be used as a credit next year.
On your Form 1040, Line 44/Line 47 Tax = $4,000
Line 53 Residential energy credits, enter only up to your Tax amount on Line 47 = $4,000
Subtract Line 53 from Line 47 = $0.00
Assuming there are no other entries between Line 47 and Line 62, enter $0.00 on Line 63 - This is your Total Tax.
Enter the Federal income tax withheld on Line 64, which in this example is $4,500.
$4,500 will be your total refund ($4,000 from your energy credit and $500 excess withhold - which would have been your refund amount without the energy tax credit).
And, next year, you will enter the remaining $2,000 energy credit on Line 53.
SWEET! That is, if the energy tax credits are still available for 2018 and after. I can't find anything on this so far.
You need to look at your tax return and see what your actual tax liability is (Line 44 of the 1040) ...that's the amount that the credit will offset.
If your tax on Line 44 is zero, you have nothing to offset and the entire amount of solar credit would be carried to the next year until you have a tax liability that it can be used against.
This thorough formula does make sense and it becomes much easier to compute on our own on the eventual amount to be deducted. Sometimes we overestimate what to expect at the end of the year and we might end up under-budgeting our expenditure. That could create problems if we do not have any extra savings on hand.