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March 14, 2023
Question

30% Credit for Solar system installation

  • March 14, 2023
  • 1 reply
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In 2022, I installed a Solar System on my rood, including two Backup Batteries. When I filled out the form under "Enter Any Additional Energy-Efficient Improvements" of $38,840, the credit resulted is around $3,000, far away from 30% as I knew. Why?  Did I put this expense in the wrong place?

Please, enlighten me because it does not clearly explain how to get this credit.

Thank you

    1 reply

    DawnC
    Employee
    March 14, 2023

    The Solar Credit is a non-refundable credit.   That means it can't reduce your tax liability past zero.   Any unused credit will carry forward to next year until you use it all.   You can look at your tax return.    Form 5695 will show how much of the credit you can take this year and will show the carryover amount on LIne 16.   If you have Form 5695 included with your return, the credit was entered in the right place.  

     

    Also, you can view your 1040 to see the credit applied on Line 20.   Line 20 includes all available non-refundable credits from Schedule 3.  

     

    Expenses that count for the credit:  

     

    • Solar PV panels or PV cells used to power an attic fan (but not the fan itself)
    • Contractor labor costs for onsite preparation, assembly, or original installation, including permitting fees, inspection costs, and developer fees
    • Balance-of-system equipment, including wiring, inverters, and mounting equipment
    • Energy storage devices that are charged exclusively by the associated solar PV panels, even if the storage is placed in service in a subsequent tax year to when the solar energy system is installed (however, the energy storage devices are still subject to the installation date requirements)
    • Sales taxes on eligible expenses
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