Solar installation didn't go trough, IRS rejected due to miscalculations, so I didn't get the credit (36K liability, withheld ~40K). Can I do something?

[hectormoralespil]

I was under the impression that if your tax liability was more than the credit and you had your taxes withheld and you were subject to a refund you could get your Solar Tax credit refunded as well.

So I attached form 5695 with the info (couldn't file electronically for some reason, had to do it via snail mail) and got my refund cut in half due to a "Miscalculation" , essentially the Solar credit didn't count.

I had 36K liability, paid over 40K (withheld), was subject to a refund of ~5K   6K of the Solar credit, only got the 5K.

Did I do something wrong? Is this the way it REALLY works?

[AnnetteB6 · Accepted solution]

If you had a tax liability (you owe any income tax), then the solar credit would be used to reduce your tax liability.  This means that your refund would increase by the amount of credit that was used on your return.  If there is any credit left over, then it can be used on a later tax return.  

Technically, you are not getting any of the solar credit refunded to you, but you would get back more of your withholdings as a result of the credit.  

The issue with your return may be a result of the 'miscalculation' you mentioned, which may or may not be related to the solar credit.  It could be another issue entirely.  Take a closer look at the letter of explanation from the IRS to try to understand what was changed.  Without understanding what they changed, there is no way to know if you can amend your return to fix the situation.  

To learn more, take a look at the following TurboTax article:  Federal Tax Credit for Residential Solar Energy

[hectormoralespil]

Thanks, so then I should've gotten a bigger refund, maybe... the letter doesn't explain anything more than "You said you owe us $30K and we say you owe us $36K" thus, you get 6K less in return. On the other hand I suspect this could be due to child tax credit which is also around 6K, but to really know I guess I should go through an audit. 

[BillM223]

Please look at page 4 at the Residential Energy Efficient Property Credit Limit Worksheet—Line 14 in the form 5695 ....

You will see that a lot of credits - like the Child Tax credit - take precedence over the solar energy credit.

P.S. when calculating the credit, you didn't include the cost of a new roof, did you? All the solar companies tell you that you can add a new roof to the calculation, but that just isn't true...

[hectormoralespil]

Uhm that makes a lot of sense, I mean, for my particular situation: AGI + credits, at the end I may have ended in this phase out and couldn't really take advantage. There's a LOT of fine print and gets super tricky.