Solar Tax Credit

[thomBangor]

When I do this with my tax preparer I get IRS form 5695 and fill it out as practice. I then hand that to my tax preparer along with a mini-spreadsheet of my line-item-costs and what category/5695lineNumber I'm referencing them to.

Tax preparer had no problem with it after that. You have to do a bit of reading on how to fill out the 5695, but I think it is worth it-- about 30 minutes of reading for $hundreds/thousands return.

 

[fatjay]

Has anyone been audited as a result of the solar tax credit? I'm missing a couple receipts and it would be a pain to re-obtain them.

 

[jeff.lankford]

Has anyone been audited as a result of the solar tax credit? I'm missing a couple receipts and it would be a pain to re-obtain them.

Do you have cancelled checks, credit card statement lines items, etc. to be able to show proof of payment? If so I'd rest easy, claim the credit, and just move on.

Worst that could happen in an audit is they deny those items and tell you to pay pay back the credit. It's not like you're gonna go to jail for missing a receipt...

 

[fatjay]

Do you have cancelled checks, credit card statement lines items, etc. to be able to show proof of payment? If so I'd rest easy, claim the credit, and just move on.

Worst that could happen in an audit is they deny those items and tell you to pay pay back the credit. It's not like you're gonna go to jail for missing a receipt...

Yes, i have credit card statements where you can clearly see massive chunks of outgoing cash to the specific vendors. And that's sufficient?

 

[jeff.lankford]

Yes, i have credit card statements where you can clearly see massive chunks of outgoing cash to the specific vendors. And that's sufficient?

This is from a Google search. I'm still looking for an actual IRS reference...

"
Think of supporting documents as a broad category—when it comes to expenses, you’re looking for an itemized proof of purchase. This might be a printed receipt, but it might also be:

• Credit card statements
• Bank statements
• Canceled checks
• Itemized invoices with digital payments
• Real estate closing statements

"

 

[Rocketman]

Yes a credit card statement going to a vendor that specializes in solar - would be fine. Now it the vendor was something like Amazon and sold a lot of non- solar stuff - you could have difficulty proving it to the auditor.

 

[jeff.lankford]

Yes, i have credit card statements where you can clearly see massive chunks of outgoing cash to the specific vendors. And that's sufficient?

... here's a quote from the IRS website:

"The responsibility to prove entries, deductions, and statements made on your tax returns is known as the burden of proof. You must be able to prove (substantiate) certain elements of expenses to deduct them. Generally, taxpayers meet their burden of proof by having the information and receipts (where needed) for the expenses. You should keep adequate records to prove your expenses or have sufficient evidence that will support your own statement. You generally must have documentary evidence, such as receipts, canceled checks, or bills, to support your expenses. Additional evidence is required for travel, entertainment, gifts, and auto expenses."

Burden of proof | Internal Revenue Service

When you claim expenses on your tax return, you must keep adequate records. Find out about burden of proof.

www.irs.gov

If your credit card statement lists a recognizable vendor, such as "Signature Solar", and not Victoria's Secret, I think you're fine.

 

[SkyBlue]

Has anyone been audited as a result of the solar tax credit? I'm missing a couple receipts and it would be a pain to re-obtain them.

There are several threads on R/Solar written by people who have been audited for claiming the solar tax credit. Here's one example.

https://www.reddit.com/r/solar/comments/1iijull/audit_that_wont_go_away

 

[fwunder]

If you're credit card statement lists a recognizable vendor, such as "Signature Solar", and not Victoria's Secret, I think you're fine.

Therapy expenses are classified as deductible medical expenses under the Internal Revenue Code (IRC) Section 213

 

[fatjay]

Yes a credit card statement going to a vendor that specializes in solar - would be fine. Now it the vendor was something like Amazon and sold a lot of non- solar stuff - you could have difficulty proving it to the auditor.

The one specifically I’m talking about is the ground mount setup that I mounted the panels to. I went to a steel shop and bought the raw materials and built it myself. I also dug out footers and poured concrete with rebar to support the GMSES.

 

[Brucey]

The one specifically I’m talking about is the ground mount setup that I mounted the panels to. I went to a steel shop and bought the raw materials and built it myself. I also dug out footers and poured concrete with rebar to support the GMSES.

I would have printed photos as evidence of the ground mount construction and parts involved. Visual evidence alongside invoice for materials hard to deny that.

 

[fatjay]

I would have printed photos as evidence of the ground mount construction and parts involved. Visual evidence alongside invoice for materials hard to deny that.

Reading the reddit makes me a bit paranoid now. Seems people are providing endless documentation and getting rejected without reason. Even with professional installation.

Has anyone done a DIY and not gotten audited, or been audited and they were satisfied with the documents provided?

I thought my inverters were a slam dunk, now people are needing certifications of their inverters?

 

[Solar Guppy]

I've filed every year for solar since 2020, not a peep.

I do have full records as I use Quicken and just run reports at the end of the year for anything Solar related. I also print out any large expenditures in hard copies and keep all in a file. Also have photo's of all the projects, beginning to end.

 

[fatjay]

That's good to hear. I have lots of pictures, I have excel sheets and bank statements, I just lost about $1500 of receipts from the steel yard that I used to build my ground mount. I have the cc transactions though.

 

[wdwtx2.0]

That's good to hear. I have lots of pictures, I have excel sheets and bank statements, I just lost about $1500 of receipts from the steel yard that I used to build my ground mount. I have the cc transactions though.

You may be able to get the steel yard to give you a copy of the receipt.
I had to get a copy from a vendor.
I just told them the date and amount, and they pulled it up on their computer, and emailed it.

 

[Rocketman]

As an accountant I read the Reddit article about the audit. This is my opinion based on working with the IRS for almost two decades. He had a corespondents audit - everything was done via mail - he never met his auditor.

After he determined His auditor was giving him the run around. He could ask for the manager to review.

One thing we do on our corespondent audits is we write a short nice to-the-point letter explaining everything we are sending in and why is it correct. The IRS employees have a HUGE stack of paperwork to process each day. You want to present your information in a well organized way so they can quickly read and understand it - and come to the conclusion that you are correct. The backlog has gotten worse over time, I am currently involve in one, We sent the information in fairly quickly, they said in the original letter it could take six weeks, at the six week mark we got another letter saying, it is taking longer to process, we will let you know in another six weeks - it has been four out of those six weeks and not a peep yet…. The IRS really needs more people there to process stuff rather than less. IMHO.

 

[fatjay]

As an accountant I read the Reddit article about the audit. This is my opinion based on working with the IRS for almost two decades. He had a corespondents audit - everything was done via mail - he never met his auditor.

After he determined His auditor was giving him the run around. He could ask for the manager to review.

One thing we do on our corespondent audits is we write a short nice to-the-point letter explaining everything we are sending in and why is it correct. The IRS employees have a HUGE stack of paperwork to process each day. You want to present your information in a well organized way so they can quickly read and understand it - and come to the conclusion that you are correct. The backlog has gotten worse over time, I am currently involve in one, We sent the information in fairly quickly, they said in the original letter it could take six weeks, at the six week mark we got another letter saying, it is taking longer to process, we will let you know in another six weeks - it has been four out of those six weeks and not a peep yet…. The IRS really needs more people there to process stuff rather than less. IMHO.

Thank you for your insight. This is helpful.

I'm not trying to scam the system, but some of these stories make me a bit paranoid.

 

[ammarsadiaminu]

the EG4 Hybrid Mini Splits are indeed electric-powered heat pumps. Mini-split systems like these are a type of air-source heat pump, which use electricity to transfer heat (either into or out of a home) rather than generating heat through combustion, as traditional furnaces do. The "hybrid" aspect likely refers to their ability to operate with both AC and DC power sources (common in solar-integrated systems), but this does not change their fundamental classification as heat pumps.