New to solar and question about the 30% of the purchase price Federal tax credit

[Jasper7821]

I'm pretty sure I'm getting solar and had a tax question.
30% Federal credit of my quoted system is $6,060.
And the sales rep told me whatever remainder credit would go towards the following years if I didn't pay 6k in Federal taxes.
I paid $4,500 and got a refund of $825 from Federal.
Does that mean if it's the same next year, I'll get $3,675 back from solar plus the $825. And next year (thought it was 30% but just saw it was 25% for 2019)
I'll get $2,265 (roughly 25% of the balance of the $6,060.
And if I change my withholding to pay more taxes, will that increase my Federal credit even though it

[Alan1296]

That's a tough one. On form 5695 you'll enter the total cost of your system and multiply by 30%. (if your system was bought last year) I'm assuming your figure is $6060 on line 6 and line 13 of that form. To many variables past that point. If line 14 is less than $6060 the difference will be shown on line 16 and can be carried over to next year. The percentages you're talking about don't have anything to do with the tax credit. The 30% (or 25%) is what part of the total cost of the system is tax deductible. It's not the percentage of the tax credit you get. I received about 95% of my tax credit on this years taxes, leaving a small amount that I carried over to next year. Hope that helps some.

[Jasper7821]

My mistake, I haven't gotten the system yet, so it would be first done next year on my 2019 tax return.
im not following the rest of it. I guess I'll have to look at the form and try to calculate it out.
Thank you for the reply.

[discodanman45]

Any system in service during 2019 is 30%, 2020 is 26%, and 2021 is 22%. After that it will be 0% for residential. That tax credit is a pretty complicated thing to calculate, especially if you have other tax deductions. Your original calculation is pretty much correct, but there is more to it than that.

[solarix]

They changed the rule from being placed in service in the taxable year to just having installation started. Would have to spend the money this year though.

[QuantumSlice]

We let TurboTax handle our taxes. It computed the correct amount and took deduction that it could. Some of it will be on our tax form next year. We are retired and rent our second house here in Colorado. I first thought I couldn't get the tax credit on the rental property so didn't install a system. But now I realize there is a way for us on this via the energy generation side of the taxes(25D credit). Looking forward to putting in a big system at the rental house this year! It is consuming 1000 kwhr per month with its hot tub.

Hopefully we can deduct the install cost as an expense on the rental income form, then also get the credit from 25D. And nullify our electric bill. Seems a to good to be true. The best part will be a new adventure - underground lines... Pole mounts... New SMA inverter... County permits... This is fun stuff for a retired DIY engineer.

[Ampster]

The amount of any refund you got in the past is related to how much you had withheld. The best way to determine withholding is to make a conservative estimate of your tax liability and withhold accordingly. There are penalties for under withholding but I dont like to give the government my money any sooner than I have to.

[Jasper7821]

Thanks for the replies, good to hear I'll be eligible for 30% on my 2019 taxes. I'd hope to use most credit as possible this year since it drops to 26% for 2020 filing.
Based on the numbers I posted originally, is this slightly how it works?
I paid $4,500 in Federal taxes and got $825 refund. If I slightly increase my withholding it will work out better ?

[discodanman45]

Thanks for the replies, good to hear I'll be eligible for 30% on my 2019 taxes. I'd hope to use most credit as possible this year since it drops to 26% for 2020 filing.
Based on the numbers I posted originally, is this slightly how it works?
I paid $4,500 in Federal taxes and got $825 refund. If I slightly increase my withholding it will work out better ?

I could be wrong, but I believe you will eventually get all of your 30% back. Lets say you receive $8000 in credits from your solar. If you could only apply $5000 to your 2019 taxes, the remaining $3000 rolls-over to 2020. They don't reduce that amount. The form 5695 is a general form that covers more than just solar. Whatever you carryforward on box 16, just carries over to the next year. If you can only use $2000 of the $3000 in 2020, the remaining $1000 carries over to 2021.

[Jasper7821]

I see, I was thinking that whatever carries over will be 26% in my 2020 filing.

[Ampster]

I paid $4,500 in Federal taxes and got $825 refund. If I slightly increase my withholding it will work out better ?

As I said earlier it all depends on your liability for this year. Your taxable income may change. The tax rate may change depending on your income and your deductions. You might get a better answer from a tax professional than from an anonymous poster like me.

[Jasper7821]

Thanks, I am trying to fill out the 5569 form based on last year to try and see what credit I'd get this year. Unfortunately everything should remain the same with my income/deductions for next years filing.

[Jasper7821]

I filled out the 5695 form using 2018 tax return. Everything will probably be close to the same for my 2019 return.
On line 6 the 30% is 6k, on line 14 (from line 11 on my 1040) it's $3665.
then line 15 says enter the smaller amount of line 13 or 14 which is the $3665.
so does that mean I'd get $3665 back as a refund for 2019 then the rest of the 6k on 2020 return if things stay the same on my returns ?

[Ampster]

.......
so does that mean I'd get $3665 back as a refund for 2019 then the rest of the 6k on 2020 return if things stay the same on my returns ?

A refund is the difference between what you had witheld and what you owe.
A tax credit reduces the amount you owe.

[Jasper7821]

Ok, ik still not getting it. Since I got a $835 refund of the $4,500 I paid in Federal taxes and my Federal tax owed was $3,665, are you saying I'd get nothing back since I didn't owe any Federal tax at the end of the year?
And I received a $212 state refund and AZ has a 1k tax credit. So I wouldn