The ability to carry forward unused tax credits to future years depends on the type of credit you are referring to.
- Energy Efficient Home Improvement Credit: This credit cannot be carried forward to future years. If you do not have sufficient tax liability to claim the full credit in a given year, any unused portion of the credit is lost and cannot be claimed in a later year.
- Residential Clean Energy Credit: For this credit, unused amounts can be carried forward to future years. This means if your tax liability limits the amount you can claim in a year, the excess can reduce your tax owed in future years.
- Research and Development (R&D) Credits: Businesses can carry forward unused R&D credits for up to 20 years at the federal level. This allows companies to offset future tax liabilities even if they cannot fully utilize the credits in the year earned.
Therefore, whether you can carry forward unused credits depends on the specific type of tax credit involved.
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