diy solar

diy solar

26% Solar Tax credit extended through 2022!!

Yes, it includes anything DIY.

Yes, it includes anything off-grid.

Yes, it includes DIY batteries.

Yes, it even includes the labor for "PRO" installers.

Yes, you can even add YOUR labor to the install cost, and deduct YOUR labor.
 
Yes, it includes DIY batteries.
Provided that they are new and you charge them from solar.
Yes, you can even add YOUR labor to the install cost, and deduct YOUR labor.
Does that wash out when you add your labor and then deduct it? I any event this is a tax credit not a true deduction. The amount of the credit is 26% of the total cost including the above plus any service panel upgrades required by the install.
 
It's not quite finalized...

This extension was put into the Covid stimulus bill, and might just get vetoed tomorrow.
 
Exactly how does this work.
To make things easy, I basically spent $1000 on my solar set-up for our off grid cabin this year.

I don't expect a CPA to give me exact instructions, but in a "Tax Credits for Dummies" kind of way, how do I get the benefit for this? Supply receipts for the purchases?
 
File your receipts away with your tax records.
You just put on the return that you spent $1000 on solar stuff (not including any used to heat a swimming pool), and get a credit of $260 off whatever taxes you othewise owed.
Save your records for at least 4 years (preferably 7) after the return was filed or adjusted.
It is possible the credit doesn't get used this year but is allowed to be carried forward to a future year.
In which case, keep records 4 or 7 years after filing/adjustment date of when the credit is finally used.

For my state return, I had to pull out records from 10 years before, because accumulated credits weren't used up until later.
I'm sure the auditor thought I pulled the ($50k) number out of my @$$, to create a bogus credit.
I delivered receipts documenting the expenditures within $1. Probably that was rounding error for multiple years.
They never bothered me again.

A tip - photocopy thermal printer receipts - they fade to illegible.


Hurry up, spend more money and hook the equipment up!
 
Provided that they are new and you charge them from solar.

Does that wash out when you add your labor and then deduct it? I any event this is a tax credit not a true deduction. The amount of the credit is 26% of the total cost including the above plus any service panel upgrades required by the install.
My wife is self employed so our marginal tax rate on our next dollar earned is effectively 50%. Filing a 1099 for DIY labor for a 26% tax deduction would result higher system costs. :-(
 
I don't believe your own labor is ever tax deductible or counts as an expense.
If someone else performs the labor, what you pay him would qualify for the credit.
Have a favorite child who's college expenses you would like to cover?
Alternatively, if (a high tax bracket worker) qualified for an individual 401(k), then 100% of income (after subtracting social security tax) could be a pre-tax contribution up to dollar limits. If a low tax bracket worker, then Roth would be better than deductible.

Does your wife have an individual 401(k)? The plan has to be established this calendar year in order to be allowed to receive contributions prior to tax filing deadline.
Dollar limits are (approximately) 100% of income up to $19k, plus $6k if over 55. 20% of income over that up to about $50k.
Some of my employers have offered non-deductible contributions above $19k/$25k, swept back-door into Roth. Not sure if individual 401(k) can have same.
Schwab is one place you can open an individual 401(k)
 
Filing a 1099 for DIY labor for a 26% tax deduction would result higher system costs. :-(
I agree, I did not understand the logic of the other poster. Although you also use the term deduction when it is a credit against taxes. I still agree with your math.
 
I don't believe your own labor is ever tax deductible or counts as an expense
I agree. Technically what the other poster was suggesting was that the labor be added to the capital cost of the item that then qualifies for 26% tax credit. I am splitting hairs but still agree that the earlier suggestion is not optimal.
 
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The problem for self employed people is you have to pay your own medicare and social security, unemployment, workers comp, etc, etc, etc.... My wife doesn’t have a 401k but maxes her SEP (simplified employee pension). The only way the labor works is if you don’t report it or as mentioned above, you have someone with little or no income claim the income.
 
At least in Calif, as self employed I don't have to pay unemployment (think it is option) or worker's compensation (not eligible)
We all (self employed or regular) have to pay employee share of social security, something like 7% or 9%.
As self-employed, also the employer portion, which is the same. That's the only extra tax.
But first, expenses (work related vehicle mileage, my RF test and measurement lab) are deducted from gross income to get taxable net.

401(k) of all employers including self count toward the limit, also some federal plans.
Exception is 457(b); if you have that with your employer (state/county public sector) you can max that out, also your individual 401(k)

Your wife's SEP probably limits her contributions to a much lower figure than 401(k) would, because 401(k) allows 100% of income deferred up to the first $19k/$25k. Check it out, try running both in TurboTax or whatever, in time to decide this year if you want to open one. I think it could be a $15k difference in how much can be set aside pre-tax. At 50% marginal rate, that's $7500 more for you.
 
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Thanks for the solo 401k pointer. I’m not sure if my wife knew that was an option when she started her business. It looks like Fidelity and Vanguard both have some low cost options there.

She started her business before we met and she’s proud of being self sufficient so I try not to push her to change things. She was so disappointed when her medical premiums went up $4k per year about 10 years ago and I had to put her on my company’s plan as a result.
 
Low cost? I pay zero fees at Schwab.
Stock trades are also free now.
Think they make money with some mutual funds, also margin lending.

We switch who's employer provides our medical as plans change.
I've been mostly under HDHP with HSA (another pre-tax IRA). Insurance company gets $6000 premium, pays $50 each for an exam and lab work, I pay the first $3000 of any medical expenses before insurance kicks in. Such a deal! (for the insurance company)
Alternative is pay $9000 premiums every year, whether I have a claim or not.

Just read Congress passed a bill forbidding out-of-network billing for services provided to an unconscious patient without consent.
Article said private equity groups were buying physician networks, taking them out of insurance networks so they could bill far higher rates.
And people say those of us who believe conspiracy theories are kooks!
 
Exactly how does this work.
To make things easy, I basically spent $1000 on my solar set-up for our off grid cabin this year.

I don't expect a CPA to give me exact instructions, but in a "Tax Credits for Dummies" kind of way, how do I get the benefit for this? Supply receipts for the purchases?
Use TurboTax, or fill out Form 5695.

As of October 13th, 2020 it is still draft.
 
Looks like I cannot take advantage of this, as our solar set-up is at our hunting cabin, and not our "Main Home".
Am I understanding this correctly?

Looks like these credits are only for your primary residence.

"Qualified solar electric property costs. Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed. Some solar roofing tiles and solar roofing shingles serve the function of both traditional roofing and solar electric collectors, and thus serve functions of both solar electric generation and structural support. These solar roofing tiles and solar roofing shingles can qualify for the credit. This is in contrast to structural components such as a roof's decking or rafters that serve only a roofing or structural function and thus do not qualify for the credit. The home doesn't have to be your main home."
 
"Qualified solar electric property costs. Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed. Some solar roofing tiles and solar roofing shingles serve the function of both traditional roofing and solar electric collectors, and thus serve functions of both solar electric generation and structural support. These solar roofing tiles and solar roofing shingles can qualify for the credit. This is in contrast to structural components such as a roof's decking or rafters that serve only a roofing or structural function and thus do not qualify for the credit. The home doesn't have to be your main home."
Man...I read through that thing a few times and I missed that part. So much wording my head started spinning. Thanks.
 
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