Dear Tax Guy, I just bought a used electric vehicle, so now I’d like to install a solar array to offset the additional electricity use.
My tax liability for 2023 will be enough to get full benefit of the used EV tax credit or the solar tax credit. But not enough for both. Another example: We’re still a year away from being able to transfer the EV credits at the point of sale to the car dealer instead of claiming the credit on a tax return.
The Inflation Reduction Act also wants more people to run their homes on renewable energy, so it’s revamping the tax rules there. The Residential Clean Energy Credit that you’re eyeing for the solar panels is worth 30% of the costs.Time to shift the tax tactics into a higher gear. Tax credits reduce tax liability. When credits shrink a tax bill to $0, the excess becomes refund money if it’s a refundable credit.
The route is straightforward: Claim the credit that can’t apply in the future and wait to take advantage of the one that can carry forward.