TurboTax not allowing me to claim Solar Credit this year, says it will be forwarded to next year; why?

[DmOcRsI]

So this year we installed a Solar Panel system on the house for $49,008.  I input the amount and it gave me the following message.

The amount of $12,742 is correct but it will be carried forward until 2022?  Why?

[GeorgeM777]

Most homeowners who install a home photovoltaic system can claim the federal solar Investment Tax Credit.  However, not everyone will be able to take full advantage of this lucrative financial incentive.  To benefit from the solar ITC, you must owe federal income taxes.  If you do not owe any federal income taxes, or if TurboTax is showing that you currently are getting a refund, you will not be eligible for the ITC, at least not for 2021.  

From the clip you provided, TurboTax is indicating that "Based on what you've entered so far..." (bolded and underlined text not in the original) so it could be that you have not entered enough information for the application to apply the ITC.  Continue preparing your return cognizant of the fact that you must have a tax liability to take advantage of this credit. 

[DmOcRsI]

The problem stands that I NEVER owe... I always receive a refund both Federal and State.  So is this "rule" something that the IRS has put forth or something that TurboTax can't get around?

[RobertB4444]

This is an IRS rule.  But you're confused by the terminology.  You can OWE taxes and still get a refund.  So your solar credit should reduce your tax bill and increase your refund - unless your tax bill is actually zero.  If that is the case - you made less money for the year than your deductions - then you can't take the rest of the solar power deduction and it will be rolled forward to the next year.  

If it is the case that your tax bill is always reduced to zero by your child tax credit and your standard or itemized deduction then it is true that the solar power credit is not going to benefit you at all.  It is what's known as a "non-refundable credit" which means it can only reduce your tax bill to zero and no more.