US Federal Solar Tax Credit

[moonjack]

Probably a dumb question, but I've done some searching and came up empty. I am finding that my little foray into solar this year is quickly expanding.

One part of this is that my new battery purchases for 2023 have increased to over 3kwh, which I didn't expect when I started. From what I can read from the IRS, "battery technology" in an "installation" over 3kwh can apply to the federal solar tax credit.

Does buying smaller batteries (100ah) at different times during the year (and put in service) that sum to over 3kwh apply, or does the IRS expect a single battery or single "professional installation" for this requirement to be fulfilled?

 

[Tulex]

Far as I understand, it's the total investment directly related to solar during the year it was put into service.

 

[JoeHam]

I believe the 3 kWh is a new requirement.

Here is the reference :

Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics

This guide provides an overview of the federal investment tax credit for those interested in residential solar photovoltaics, or PV.

www.energy.gov

I do not see any requirement that it be a single battery and there has never been a need for professional installation.

 

[BentleyJ]

And I don’t know where you’re getting the 3 Kwh stuff.

I don’t think that’s a requirement.

The link below does indicate the minimum battery size is 3kWh to be eligible for the the credit.

Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics

This guide provides an overview of the federal investment tax credit for those interested in residential solar photovoltaics, or PV.

www.energy.gov

 

[moonjack]

The IRS site just helpfully says

"Battery storage technology must have a capacity of at least 3 kilowatt hours."

I may end up sending the IRS a note.

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

 

[JoeHam]

The link below does indicate the minimum battery size is 3kWh to be eligible for the the credit.

Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics

This guide provides an overview of the federal investment tax credit for those interested in residential solar photovoltaics, or PV.

www.energy.gov

Sorry @BentleyJ , I found that same fact in another reference and was editing my post while you posted.

Great minds think alike…….. and so do ours ?.

 

[JoeHam]

I also found another reference while researching the issue that now you need 100% solar charging to protect the tax credit !

I thought that was surprising enough to warrant a new thread :

New IRS requirements for battery tax credit. False alarm, please ignore.

I’m no tax expert but I believe there are a couple new rules to get the 30% tax credit for batteries. Specifically: The batteries must be at least 3 kWh. I don’t recall seeing that in years past. And the most surprising one: THE BATTERIES MUST BE 100% CHARGED BY SOLAR ! Don’t EVER use...

diysolarforum.com

Not sure how they will enforce that rule.

 

[BentleyJ]

IMHO you are overthinking the Fed Credit. You may be confusing the Tax Credit with the Rebate programs that many utilities offer for high efficiency appliance replacement such as HVAC. In most of those cases the system must be comprised of components selected from an approved list and installed by a licensed contractor that is also approved by the utility to participate in the program. Its such a PITA and usually costs more so in the end, the net price out of your pocket after the rebate is about the same as if you had shopped around and hired a less expensive contractor.

That said, all you have to do is file form 5694. Last time I did it a few years ago they didn't even ask that you send copies of the receipts. Of course you have to keep them for 4 years just in case you audited. There are virtually no restrictions on the brand of equipment you use or if its DIY and as far as I know there is no requirement to have a building permit to be eligible. In any case, when you file the form you don't have to attach anything to it. As long as the equipment was purchased sometime during the year you are taking the credit it doesn't have to be purchased all at the same time.

As Joe Ham mentioned it would be virtually impossible to enforce some of the nuianced stated restrictions. How many IRS auditors have the knowledge to understand anything except that your receipts total up to the amount you claimed.

 

[EastTexCowboy]

It really doesn't matter what you claim unless you are audited. ?

Just sayin ...

 

[DIYrich]

I also found another reference while researching the issue that now you need 100% solar charging to protect the tax credit !

I thought that was surprising enough to warrant a new thread :

New IRS requirements for battery tax credit. False alarm, please ignore.

I’m no tax expert but I believe there are a couple new rules to get the 30% tax credit for batteries. Specifically: The batteries must be at least 3 kWh. I don’t recall seeing that in years past. And the most surprising one: THE BATTERIES MUST BE 100% CHARGED BY SOLAR ! Don’t EVER use...

diysolarforum.com

Not sure how they will enforce that rule.

Don't believe everything you read on the internet.

 

[JoeHam]

I may end up sending the IRS a note.

I wouldn’t, it’s always easier to get forgiveness than permission. ?

Besides, I understand that you get the credit in the year that you put the items IN SERVICE.

So if you bought your batteries until you got up to 3kWh and then put them in service you should be fine IMHO.

 

[JoeHam]

Don't believe everything you read on the internet.

I hope you’re right but the reference posted is an IRS private letter ruling summarized by tax attorneys who hopefully know more about the crazy US tax nonsense than a DIY hack like myself. Here is the most surprising paragraph:

“While some questions remain unanswered, the PLR is good news in that it confirms that subsequently-installed batteries may be eligible for the Residential Solar Credit. However, taxpayers must be careful that they can demonstrate that 100 percent of the energy used by the battery is derived from a solar source.”

For the record, my batteries are only charged with solar.

 

[moonjack]

IMHO you are overthinking the Fed Credit. You may be confusing the Tax Credit with the Rebate programs that many utilities offer for high efficiency appliance replacement such as HVAC. In most of those cases the system must be comprised of components selected from an approved list and installed by a licensed contractor that is also approved by the utility to participate in the program. Its such a PITA and usually costs more so in the end, the net price out of your pocket after the rebate is about the same as if you had shopped around and hired a less expensive contractor.

That said, all you have to do is file form 5694. Last time I did it a few years ago they didn't even ask that you send copies of the receipts. Of course you have to keep them for 4 years just in case you audited. There are virtually no restrictions on the brand of equipment you use or if its DIY and as far as I know there is no requirement to have a building permit to be eligible. In any case, when you file the form you don't have to attach anything to it. As long as the equipment was purchased sometime during the year you are taking the credit it doesn't have to be purchased all at the same time.

As Joe Ham mentioned it would be virtually impossible to enforce some of the nuianced stated restrictions. How many IRS auditors have the knowledge to understand anything except that your receipts total up to the amount you claimed.

I now think you are right, although I also have experience with certain government agencies being non-technical catty bags of difficult.

 

[moonjack]

I hope you’re right but the reference posted is an IRS private letter ruling summarized by tax attorneys who hopefully know more about the crazy US tax nonsense than a DIY hack like myself. Here is the most surprising paragraph:

“While some questions remain unanswered, the PLR is good news in that it confirms that subsequently-installed batteries may be eligible for the Residential Solar Credit. However, taxpayers must be careful that they can demonstrate that 100 percent of the energy used by the battery is derived from a solar source.”

For the record, my batteries are only charged with solar.

Some of the summarized items I've seen indicate that it doesn't have to be connected to solar for 2023

Solar Investment Tax Credit: What Changed?

President Biden signed the Inflation Reduction Act into law, expanding the Federal Tax Credit for Solar Photovoltaics, also known as the Investment Tax Credit (ITC).

www.energy.gov

 

[JoeHam]

Egg on my face, just found this from 2023 :

“Batteries and the federal tax credit at a glance:
Residential batteries installed in 2023 can qualify for the 30% federal tax credit, even if they aren’t attached to solar panels.
The value of the tax credit will vary depending on the equipment installed and labor costs.

The battery must be installed at the taxpayer’s residence and be owned by the taxpayer to receive the tax credit.”

Reference here :

Guide To Solar Battery Tax Credits, Rebates, And Other Incentives

A comprehensive guide to various tax credits, rebates, and incentives for solar batteries on the federal, state, and utility level.

www.solarreviews.com

And I posted at the same time as @moonjack this time ?.

I’m going to bed.

 

[Conundrum]

If I buy the EG4 18k + bunch of EG4 batteries, does it still consider ESS? Or is the batteries considered as ESS. My plan is to use this setup as my alternative to ecoflow like system just large capacity more expensive as UPS backup for selected equipment.

 

[Danke]

If I buy the EG4 18k + bunch of EG4 batteries, does it still consider ESS? Or is the batteries considered as ESS. My plan is to use this setup as my alternative to ecoflow like system just large capacity more expensive as UPS backup for selected equipment.

To use the batteries as an ESS, one would need a charger and inverter. So I don’t see why not. If they question it, just hang a solar panel from your clothesline or yard flamingo.

 

[overl4nd]

So if I get a portable station for backup power to use in outages, I don't really need to tie into my apartments grid. I just need to have it and use it? Or is it necessary to actually wire it (as opposed to just plugged into wall socket)?

 

[Danke]

So if I get a portable station for backup power to use in outages, I don't really need to tie into my apartments grid. I just need to have it and use it? Or is it necessary to actually wire it (as opposed to just plugged into wall socket)?

Do not plug into a wall socket, unless you have disconnected the power to your apartment.

 

[overl4nd]

Do not plug into a wall socket, unless you have disconnected the power to your apartment.

Yes, that;s what I mean. Remove the breaker when power outage, and plug in in, get power... And then once the neighbors lights come on, Remove, and turn on power