Question about the solar tax credits

[ericfx1984]

Let's say that I bought 10,000 Watts of solar panels from a distributor in 2022

And then let's say that I bought an inverter from another distributor in 2022

From what I'm reading the tax credit is based on when you put the eligible items into use, not necessarily when you purchase them

Could I in fact then claim these items on my 2024 tax return for credit?

 

[DougfromdaUP]

Yes, as I understand it. As long as you otherwise qualify.
You can’t take the credit until the system is in service, is correct.

 

[ericfx1984]

Yes, as I understand it. As long as you otherwise qualify.
You can’t take the credit until the system is in service, is correct.

Any idea how they confirm when the system is in service? I mean I imagine they would send somebody to your house... But then again it is the federal government

 

[12VoltInstalls]

Let's say that I bought 10,000 Watts of solar panels from a distributor in 2022

And then let's say that I bought an inverter from another distributor in 2022

From what I'm reading the tax credit is based on when you put the eligible items into use, not necessarily when you purchase them

Could I in fact then claim these items on my 2024 tax return for credit?

Talk to a CPA.

I’ve never known of anything one-time you could include post-year of the purchase date other than typical depreciation.
“Going into service” maybe is specifically for solar?

Otherwise contractors would not be rushing out to buy trucks on Dec 31 LOL

 

[TomC4306]

IRS Form 5695.
...Costs. For purposes of both credits, costs are treated as being paid when the original installation of the item is completed...

Completed. Ie commissioned.

You can't get a tax credit for a pile of solar stuff you bought this year if you don't hook it up and make it work.

Form 5695 instructions.

Adobe Acrobat

acrobat.adobe.com

 

[DougfromdaUP]

Any idea how they confirm when the system is in service? I mean I imagine they would send somebody to your house... But then again it is the federal government

I don’t think they confirm it unless you’re audited.

But you should keep documents to support your claim, like your inspections.

 

[Bluedog225]

There’s a publication somewhere. I recall it was something like “put into service.” And it wasn’t further defined. Using the panels to charge a battery through your controller and powering a bulb with your inverter would seem to qualify. I took pics of the same. An audit could go several directions. I’m pretty risk averse and go with the truth.

Here’s one. I think there is a better one.

Residential Clean Energy Credit | Internal Revenue Service

If you invest in renewable energy for your home such as solar, wind, geothermal, biomass, fuel cells or battery storage, you may qualify for a tax credit.

www.irs.gov

 

[Q-Dog]

Any idea how they confirm when the system is in service? I mean I imagine they would send somebody to your house... But then again it is the federal government

They take your word for it. Keep the receipts in case you get audited.

 

[Bluedog225]

Even a poor auditor can look at satellite images and see if your solar is deployed. It’s not hard to get better images than we see on google maps.

 

[ericfx1984]

No I'm not planning to do anything I'm not supposed to... What I am trying to do is Make sure that if I am ever audited I have my butt covered

 

[12VoltInstalls]

Even a poor auditor can look at satellite images and see if your solar is deployed. It’s not hard to get better images than we see on google maps.

My panels are vertically mounted to the wall of my shop. Never seen from the aliens orbiting the earth LOL

 

[Bluedog225]

Cool. Don’t want to see anyone jammed up.

 

[Tulex]

Claimed mine (fed)for last year. My CPA covers all bases, yet didn't ask me for anything but numbers and what it was for. And yes, it's the tax year it was put into service. And only the portion you put in service. If you buy 40 panels, and only install 20 of the panels that year, you can only claim the 20 you installed.

 

[ericfx1984]

Claimed mine (fed)for last year. My CPA covers all bases, yet didn't ask me for anything but numbers and what it was for. And yes, it's the tax year it was put into service. And only the portion you put in service. If you buy 40 panels, and only install 20 of the panels that year, you can only claim the 20 you installed.

Oh that's awesome I was actually just going to ask this... So I installed nine out of 40 panels I think the year before last... So I might be able to go back and do a modification to that tax year and put a little bit more back in my pocket

 

[Tulex]

Oh that's awesome I was actually just going to ask this... So I installed nine out of 40 panels I think the year before last... So I might be able to go back and do a modification to that tax year and put a little bit more back in my pocket

But, you can only do it once per residence. As in, if I decide to double my system, I can't get a credit for it if I already claimed it last year.

Edit to add that I appear to be incorrect. I believe the sites and my accountant that I relied on are misunderstanding the phrase "can only be used once"

 

[ericfx1984]

But, you can only do it once per residence. As in, if I decide to double my system, I can't get a credit for it if I already claimed it last year.

Right yeah I get that.

 

[Bluedog225]

That’s unfortunate. I thought additions would be eligible.

 

[Hedges]

"The credit has no annual or lifetime dollar limit except for credit limits for fuel cell property. You can claim the annual credit every year that you install eligible property until the credit begins to phase out in 2033."

Residential Clean Energy Credit | Internal Revenue Service

If you invest in renewable energy for your home such as solar, wind, geothermal, biomass, fuel cells or battery storage, you may qualify for a tax credit.

www.irs.gov

That’s unfortunate. I thought additions would be eligible.

They are, per the above.

And you can add batteries later for credit.


Also,

"
Rebates are subtracted from qualified expenses if all of these apply:

• The rebate is based on the cost of the property.
• It comes from someone connected to the sale such as the manufacturer, distributor, seller or installer.
• It isn't given as payment for services you provide.

State energy efficiency incentives are generally not subtracted from qualified costs unless they qualify as a rebate or purchase-price adjustment under federal income tax law. Many states label energy efficiency incentives as rebates even though they don't qualify under that definition. Those incentives could be included in your gross income for federal income tax purposes. Find more about how subsidies affect home energy credits."

 

[Bluedog225]

Thanks Hedges. Though I think I’ll want to hear from a “Top Contributor.”

 

[kscessnadriver]

But, you can only do it once per residence. As in, if I decide to double my system, I can't get a credit for it if I already claimed it last year.

Where does it say that? (Hint: it doesn't)

 

[ericfx1984]

But, you can only do it once per residence. As in, if I decide to double my system, I can't get a credit for it if I already claimed it last year.

Technically speaking these are two separate residences... I established my residence on the first lot I purchased and installed a solar array... We've actually been living in the RV for 2 and 1/2 almost 3 years... In this municipality a RV qualifies as a residence

Then I purchased the two lots north of me and started building a house on one of those lots

The new system will be used on the new house build

Technically speaking even though I'm using the solar panels currently they're not installed on the RV they're actually installed on a shed and will eventually be tied in to the house

 

[Zwy]

But, you can only do it once per residence. As in, if I decide to double my system, I can't get a credit for it if I already claimed it last year.

You can do that but I'm taking the credit for any additions........

If you expand a system, the expansion is eligible for the credit.

Residential Clean Energy Credit | Internal Revenue Service

If you invest in renewable energy for your home such as solar, wind, geothermal, biomass, fuel cells or battery storage, you may qualify for a tax credit.

www.irs.gov

"The credit has no annual or lifetime dollar limit except for credit limits for fuel cell property. You can claim the annual credit every year that you install eligible property until the credit begins to phase out in 2033."

 

[Tulex]

You can do that but I'm taking the credit for any additions........

If you expand a system, the expansion is eligible for the credit.

Residential Clean Energy Credit | Internal Revenue Service

If you invest in renewable energy for your home such as solar, wind, geothermal, biomass, fuel cells or battery storage, you may qualify for a tax credit.

www.irs.gov

"The credit has no annual or lifetime dollar limit except for credit limits for fuel cell property. You can claim the annual credit every year that you install eligible property until the credit begins to phase out in 2033."

I get what you guys are saying, but my accountant and multiple sites say differently. I hope you are right, as I will be adding to my system, would love to get the credit.

 

[Zwy]

I get what you guys are saying, but my accountant and multiple sites say differently. I hope you are right, as I will be adding to my system, would love to get the credit.

The quote is right from the IRS website. "You can claim the annual credit every year that you install eligible property until the credit begins to phase out in 2033."

 

[Zwy]

I get what you guys are saying, but my accountant and multiple sites say differently. I hope you are right, as I will be adding to my system, would love to get the credit.

My next system will be fully written off, it is for a business. I get a nice depreciation expense for a few years. Not taking the tax credit, just depreciating it all out.