Please note: Atmos is not a tax consultant and does not provide tax advice. To understand the implications of the ITC for your situation, please consult a tax advisor or perform the necessary research.
If you usually receive a tax refund, the Solar Investment Tax Credit (ITC) can Potentially increase the amount of your refund or reduce your tax bill in future years. Here’s how it works:
- Nonrefundable Credit:
- The federal solar ITC is nonrefundable, meaning it can only reduce your tax liability to zero. It won’t provide a refund or check beyond what you’ve already paid in taxes.
- Increasing Your Refund (If You Have Some Tax Liability):
- If you normally overpay taxes throughout the year (resulting in a refund), the solar ITC reduces your total tax liability.
- The solar ITC lowers your total tax bill.
- If you had taxes withheld, but you now owe less because of the credit, a larger portion of your withheld taxes will be refunded to you, leading to a bigger tax refund.
Even if you usually receive a refund, claiming the federal solar Investment Tax Credit (ITC) still benefits you by reducing your overall tax liability. By installing solar panels and applying for the credit on your tax return, you lower the total taxes you owe.Getting a tax refund doesn’t mean the ITC won’t help you.
You’ve likely had enough taxes withheld throughout the year that you end up with a refund. By lowering your overall tax liability, the ITC either increases that refund or, if there’s more credit than your current tax liability, lets you carry the leftover credit forward to future years