Need Help for Solar panel tax credit carryforward

[arp17]

I have solar panel installed in 2023. With solar panel cost I am eligible to get $7920 tax credit. When i am doing my tax return, it shows tax refund amount $10000 (without applying solar tax credit section). When I complete the solar tax credit section my tax refund reaches to $17920 ($10000 + $7920 solar credit). 

As per IRS rule on taking solar tax credit and my tax refund of $10000 (without solar credit), I think my solar tax credit ($7920) should be carry forward to next year. Is it correct ? if yes then why turbotax is adding it to tax refund ?

[Vanessa A]

Not necessarily.  It is possible that it would increase your tax refund for this year.

Yes, it is a  nonrefundable credit, but that does not mean it cannot result in a larger refund.  When your tax liability is reduced, any payments you made are given back to you.  So if you had paid in $20,000 and with the credit, your tax liability went down to $2,080, you would get a refund of $17,920.  

It is also possible that some other credits like the Child Tax Credit changed from the Non Refundable CTC to the Refundable Additional Child Tax Credit.  The same could happen with the American Opportunity Tax Credit. 

Look at line 16 on your 1040, then also look at line 24. If the amount on line 16 is less than the full credit, then this is the maximum amount of the credit you use this year will be that number. 

Then look at line 22.  If this line is $0, then you received one of more credits that brought your taxes down to $0, however if it is not $0, then you may still able to claim a nonrefundable credit.  If you look on line 16 of your form 5695, this will show any eligible carryforward, but they are ONLY for the residential energy credit.