Residential Solar Credit Recapture

[MD8399]

I installed and paid for Solar & Batteries in 2022 and took the federal tax credit in 2022. I still have carryover credit for 2023. I received a SGIP rebate in 2023 from my utility which is not taxable but reduces my initial system cost. I thus need to reduce my carryover federal tax credit by 30% of the $2911.80 rebate I received.

 IRS Form 4255 for ITC Solar Recapture does not seem to have instructions that apply to my situation.

I’m thinking of entering “SGIP Rebate Solar Recapture $2911.80 * 30%” on Schedule 2 Line 17Z (Other Taxes) and entering the amount of $874.00.

[DaveF1006 · Accepted solution]

My suggestion is to reduce the carryforward amount in the program. As you navigate through your program, there should be a screen asking you what your 2022 carryover amount was.  If you completed your 2022 return in Turbo Tax, this amount should pre-populate.  If it does, then reduce the carryover amount by reducing it by $874.

If this did not repopulate and this entry is blank, then put in the correct carryover amount into this space taking in account for the reduction in the credit after the rebate. 

[MD8399]

Thank you. That sounds like a better solution. I was nervous that I had to document the carryover credit reduction but the IRS shouldn't care if I reduce my carryover credit.