Part of the point on the "refund"/credit is that you must have an actual tax liability, before the credit can be applied. Don't necessarily focus on the "refund" part. IF the Credit cannot be used one year, then it will carry-over to be possibly used in the next year(s).
If you look at your form 1040 from 2017...line 47 (not line 78). IF each year is similar to the last, that line is the tax liability that the credit can be applied to ....all before considering your prior withholding, or quarterly estimated taxes paid for the year. But if that line is a zero, and likely to be a zero in the future, then you will not be able to use your credit, since it is "non-refundable".....(but the tax liability will be on line 11 for 2018...new forms)
Now there are some other details that can be important for certain situations...like other credits that do not carryover will be used before the Energy Credit...but that's only if you have some of these other credits. (that is to your advantage...use the credits that do not carry-forward before the ones that do carry-forward)
Simplistic Examples:
1)You have a tax liability of $10,000. and tax withholding of $11,000 for your other income during the year (W-2, 1099-R etc).
a) If you have no energy credit, you get a refund of $1,000.
b) If you have an Energy Credit of $15,000 to use... $10,000 of the EC is used first to bring the tax liability to zero, you get all your withholding back ($11,000), and the $5,000 EC not used is carried over to be possibly used the next year.
2) You have a tax liability of zero due to a lot of deductions or low income, but tax withholding of $5,000 during the year.
a) if you have no Energy Credit, you get a $5,000 refund
b) if $15,000 Energy credit to use....you still get your $5,000 withholding refunded, but couldn't use any of the EC since the tax liability was already zero....but the $15,000 not used will carryover to the next year for possible use then.
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Other:
...you can only get a solar energy credit for the year in which the solar unit is up and running.
If you have an energy credit for a tax year, you have to try to use it the first year possible, so that the carryover amount can be accurately calculated to be carried forward. The form 5695 needs to be filed even if the Energy Credit isn't used (TTX will create it when enter your data).....that is, if you plan to ever apply for it in the first place. The carryover amount is calculated on that form...if any.
If you have dependents...I don't recall, or haven't worked thru the order of whether the Child/Family tax credits are used before or after the Solar Credit.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
