What was the tax credit rate for residential solar in 2016?
was there a carryover limitation for subsequent years?
My client got a letter from FTB requesting proof of the solar expenditure, and questioning the carryover calculation.
Lacerte automatically limited the CA Solar credit to the amount of the CA tax for 2016, and then calculated the carryover to 2017,2018, & 2019.
I had not previously questioned how Lacerte was doing the calculation, and there does not seem to be any worksheet provided that outlines the application of the credit and carryover by year.
California is asking for that carryover calculation.
The Solar System Purchase in 2016 in the amount of $51,526
2016 original credit allowed on 540 (limited by CA Tax Due) was $7,056 (as filed)
2017 carryover credit allowed on 540 (limited by CA Tax Due) was $6,854 (as filed)
2018 carryover credit allowed on 540 (limited by CA Tax Due) was $4,170 (as filed)
2019 carryover credit allowed on 540 (limited by CA Tax Due) was $11,480
(2019 is not yet filed, but under review until I determine if these calculations were correct)
Is there anyone who can tell me if Lacerte is doing the calculations correctly?
I called and talked to several Lacerte specialists, who were unable to help me. I may get a call back as the last one disconnected unexpectedly.
Can anyone help with this?
Here is my guess for your input (NOTICE THE WORD REPEALED)
That is why there is no worksheet, you entered as a carryover of dinosaur (extinct) credits. Get your checkbook out, the client will want you to cover the penalty and interest.
the problem is I didn't enter the carryforwards, the credit started as a fully allowable CA 180 residential solar energy credit, and from that point on, the Lacerte proforma software carried it over to the subsequent years.
my questions are,
1. what was the original CA state tax credit rate?
2. what were the rules to carryforward?
3. did Lacerte do it correctly or did they mess up?
And if they are not correct, Frankly my mistake here has been to trust the Lacerte Software to do these calculations/ carryovers correctly. and I have not researched, or self checked every item on the pro-forma, trusting that they have used my 15K annual fee to make it correct.
But I can't find anywhere the information to calculate it so I can do the Math
I'll be honest, I dont remember CA ever having this credit. I did find this in the Instructions for Form FTB 3540
Credit Carryover Summary
Code 180 – Solar Energy Credit Carryover
You may claim a credit carryover for the costs of installing solar
energy systems under former R&TC Sections 17052.5 and 23601, only
if a carryover is available from tax years 1985 through 1988.
If its from back in 1985-1988, thats probably why I dont remember it.