Residential Clean Energy Credit not 30%

[sunfjndh]

According to the IRS, the Residential Clean Energy Credit should be "30% of the costs of new, qualified clean energy property for your home installed anytime from 2022 through 2032." Source: Link to IRS

I'm using the Home & Business version of TurboTax for Mac. Under Personal, Deductions & Credits, Home Energy credits, I've entered the information about the new solar panels and 64 kWh of batteries I had installed in 2024. Clicking on the credit amount shows the amount for the Residential Clean Energy Credit is only 14.53% of the total amount I spent on the solar + batteries.

I expected the Residential Clean Energy Credit to be 30% of the amount spent for the clean energy project. Can you explain what I need to change to get this to be calculated correctly?

[MindyB]

Is it possible that the credit that is allowed has reduced your income tax liability (income tax only, self-employment tax is not included) to zero?  The credit is non-refundable, meaning you can't have negative income tax resulting from the credit.

See this article for more: Energy Efficient Home Improvement Credit (EEHIC)

[sunfjndh]

I don't think so because TurboTax is showing that I still own both federal and state taxes. I would expect at least the federal tax to be zero if the credit was being limited by my tax liability.

Is there any way I can see the calculation that the software is using to help debug this issue?

Is there any way to see the rebate amount that the TurboTax software thinks will carry over to the next year?

[Vanessa A · Accepted solution]

Fuel Cell Property, is not treated the same as solar panels, or wind energy. so the batteries are limited to $1,667.   Your solar panels would not have a limit other than 30% of the cost. 

If there is a carryover credit, this will be found on line 16 of form 5695.

If you had certain other taxes such as self-employment taxes, the residential energy credit will not reduce this tax so depending on what type of tax liability you have, this may be the reason you are not seeing the full credit. 

If this does not resolve your question, if you could provide more details on all of your numbers on page 2 of your 1040 along with the line number, we may be able to better assist you. 

[sunfjndh]

Batteries are not fuel cells. The help text in TurboTax on the "Enter Any Fuel Cell Properties Improvements" page, says a fuel cell "converts fuel into electricity using electrochemical means." Batteries do not have that limit, and this can also be confirmed on the IRS website: https://www.irs.gov/instructions/i5695

However, the software does do the calculation correctly, giving 30% of the cost of the batteries with no limit. I was able to confirm this thanks to your help in finding where the carryforward credits could be seen (box 16 of 5695). Thank you for pointing me to this.

As for the federal taxes being non-zero, your explanation seems plausible to be correct in my case. I have a mix of self-employment, rental income and capital gains taxes. My little back of the napkin math shows that it's likely that this lowers the federal tax liability for capital gains and maybe the rental, but not the rest.

It's confusing to know whether income not received from an employer (such as rental income or capital gains) are considered "self-employment". This is why I buy TurboTax, so I don't have to figure out these overly complicated rules.