Solar panel/Home Energy Credit

You claim the total cost as of the date the system was placed in service, meaning installed, inspected and turned on, even if you have not paid in full.

The credit can't exceed your tax liability.  Your tax liability is what you owe to the government before you consider your withholding.  For example, if you had $6000 of withholding and expect a $1000 refund, your tax liability was $5000.  If you had $6000 of withholding and owe a further $1000, your tax liability was $7000.

That means that the solar credit could reduce your tax liability to zero, which results in a refund of all your withholding.  But the credit can't be more than your liability,  The rest would be carried over.   For example, if you had $6000 of withholding and expect a $1000 refund, your tax liability was $5000.  If you add a $10,000 solar credit, it is applied to your tax liability, reducing it to zero, so you get a full refund of all $6000 of withholding.  But you can't get an $11,000 refund because the credit can't reduce your tax to less than zero.  The unused portion of the credit will carry forward to next year. 

Yes you can claim the cost of the panels even though there is a loan for them.

The credit is nonrefundable, meaning it cannot create a refund for you.  For instance;

• If in 2022 you end up with a bigger credit than you have income tax due — a $3,000 credit on a $2,500 tax bill, for instance—you can't use the credit to get money back from the IRS. Instead, you can carry the credit over to the following tax year.
  • Note - this does not mean that you will not get a refund; it just means that the credit cannot create the refund.  If you have other withholdings or refundable credits, you may still get a refund.  But the solar energy credit cannot reduce your tax liability below 0.
• The credit continues to carry forward until it is fully used up (no time limit)

Additional information on how to claim the credit.