Credits for solar energy
Before the Inflation Reduction Act, if you purchased residential energy efficient property such as solar panels and solar water heaters for your home, the tax credit was 26% of your purchase. Under the new law, the credit increased to 30% if you purchase the energy efficient equipment Jan. 1, 2022 through Dec. 31, 2032.
Depending on the total costs of the solar system equipment (including some labor and installation charges), multiply the amount by 30 %. That amount is the amount of the credit which can reduce your income taxes to zero. Look at your withholding year to date and add the 30% amount to that. Compare the result to your estimated 2022 total income taxes. If the withholding plus the 30% amount are over your estimated 2022 taxes, you can complete another W-4 with your employer to stop current withholding until the end of 2022.
To estimate your 2022 taxes, use this link https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
The Turbo Taxcaster, Tax Calculator 2022 will help you do your estimated taxes.
This solar credit is a nonrefundable tax credit, which means you will not get a tax refund for the amount of the tax credit that exceeds your tax liability. However, you can carry over any unused amount of tax credit to the next tax year.
