Comment on PV Consultation?

[sensij]

The refund amount doesn't matter does it? What matters is the amount of tax you payed in or are required to pay, right? Also, I understand that the credit can be rolled over into 3-5 additional years if it can't all be used in one year.

On this point, I would refer you here.

The relevant text:

If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit may be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.

My understanding is that you will not get a check in the mail, only the right to carry the excess credit forward. Given the political uncertainty of 2016, I would plan to reduce my withholdings and use up that credit asap, and not carry it forward for very long.

[lkstaack]

My understanding is that you will not get a check in the mail, only the right to carry the excess credit forward. Given the political uncertainty of 2016, I would plan to reduce my withholdings and use up that credit asap, and not carry it forward for very long.

Well, if you are required to pay $10,000 in taxes, made $9,000 in payments and had a $8,000 tax credit, I would imagine they would send you a check for $7,000 after you filed. The credit would reduce your tax liability down to $2,000, right?

[J.P.M.]

Well, if you are required to pay $10,000 in taxes, made $9,000 in payments and had a $8,000 tax credit, I would imagine they would send you a check for $7,000 after you filed. The credit would reduce your tax liability down to $2,000, right?

I don't think that's the way it works. This is not tax advice since I'm not a tax consultant or a CPA versed in taxes, and I don't play one on TV, but my understanding is you will NOT get a check for an energy tax credit. Check with your tax advisor. I'd also suggest you consider not taking any final advice on tax matters from the internet, this forum included.

Edit, 2200 hrs. P.S.T, 11/26/2014: On further reflection, I wonder (but sure don't know) if the IRS WOULD send you $7K, but as a refund of part of the $9k already paid. You owe $10K. An $8K solar tax credit reduces that to $2K. You paid $9K. Refund of overpayment = $9K - $2K = $7K.

If, instead of $8K solar tax credit, say you had a solar tax credit of $20K with same tax owed and same $9K est. tax paid/withholding, I wonder if you'd get back $10K - $9K for tax overpayment, $1K for solar tax credit against taxes owed and $19K solar tax credit carryover.

[sensij]

Well, if you are required to pay $10,000 in taxes, made $9,000 in payments and had a $8,000 tax credit, I would imagine they would send you a check for $7,000 after you filed. The credit would reduce your tax liability down to $2,000, right?

On closer review, I think you are right. J.P.M.'s distrust of the internet notwithstanding (with which I generally agree), a careful read of the solar credit filing instructions, form 1040, and reinforcement from discussion in the Intuit forum (and several other places not linked here), confirms that as long as your liability is at least the amount of the credit, you will receive the full amount (subject to some other credits that may or may not apply). Whether any of that liability was withheld is immaterial to the calculation, since those figures don't show up until Form 1040 line 62+ and are not referenced by any of the required worksheets or forms. My understanding of "liability" in my previous post was incorrect.

Thanks for posting, I learned a lot from this thread today!

[thejq]

On closer review, I think you are right. J.P.M.'s distrust of the internet notwithstanding (with which I generally agree), a careful read of the solar credit filing instructions, form 1040, and reinforcement from discussion in the Intuit forum (and several other places not linked here), confirms that as long as your liability is at least the amount of the credit, you will receive the full amount (subject to some other credits that may or may not apply). Whether any of that liability was withheld is immaterial to the calculation, since those figures don't show up until Form 1040 line 62+ and are not referenced by any of the required worksheets or forms. My understanding of "liability" in my previous post was incorrect.

Thanks for posting, I learned a lot from this thread today!

Thanks for doing the research. That also confirms my understanding.

[lkstaack]

I learned a lot too, and not only from this Board. I learned from the Sales Rep of Company C....that is I learned that I need to interview more companies. Company C is the highest rated solar company on Yelp in the SD area, a 5-star rating with 44 reviews. I love Yelp, but the Company C Rep failed to impress.

The Salesman of Company A came on site, performed a site survey that included using some sort of shade analyzer that predicts where shade will land at different times of the day, plugged in a bunch of numbers into his laptop app, gave me a binder with solar and company information, and then e-mailed me a detailed 5-page proposal. The Company B salesman came with a one page proposal already printed out from his Google Earth survey as well as a folder with company, salesman, loan, and equipment information. Both Salesmen had previously asked for my SDGE account and meter number.

Now, the Salesman from Company C was very different. He came with a calculator, a pen, sticky notes, laptop, and a blank one page proposal form. He asked me for my last electrical bill and launched Google Earth as we sat down. He used the bill, my houses image on Google, and his sticky notes as scratch paper. Then he wrote down his proposal with pen on the blank form. The Company A Rep recommended 22 panels on a ground mount. Company B Rep recommended 22 panels on the SE and SW roofs. Company C also recommended 22 panels.....but it really didn't matter where they went....they are able to make solar work anywhere! He noted that the roof facing NW would probably be as good as the roof facing SE because of the shade on the SE side. After I signed a contract, their engineer will come and determine the best location. Is this typical?

I would appreciate a PM from anyone in the San Diego region who can recommend a good PV Installer.

[Mike90250]

After I signed a contract, their engineer will come and determine the best location. Is this typical?

It's a sign to buy a jar of vaseline. Once you sign, nothing can change, except the pitch of your voice. Oh, wait, i forgot about "Change Orders" We can improve things 258%, by re-setting the mounts to 38deg, just sign here and here, and now you owe us $57 for the labor and $12K for the change order.

[russ]

1) on Yelp you have people evaluating how the company people smile and say yes, yes or how the sales girl swings her butt. They are evaluating something they know nothing about.

2) I have not heard people talk about the IRS seding money back - it is carried over.

3) Mike is 100% right - once you have signed the contract you are screwed - for better or for worse.

[sensij]

If, instead of $8K solar tax credit, say you had a solar tax credit of $20K with same tax owed and same $9K est. tax paid/withholding, I wonder if you'd get back $10K - $9K for tax overpayment, $1K for solar tax credit against taxes owed and $19K solar tax credit carryover.

The way I now understand this test case (assuming no other credits, payments, or other taxes involved), using 2013 line numbers.

Tax liability = 10,000 (1040 line 46 -> Form 5695 line 14)
Solar tax credit available = 20,000 (form 5695 line 13)
Solar tax credit applied = 10,000 (form 5695 line 15 -> 1040 line 52)
Solar tax credit remaining for carryover = 10,000 (form 5695 line 16)
Remaining tax liability = 0 (form 1040 line 55 -> line 61)
Tax withheld = 9000 (form 1040 line 62 -> line 72)
Amount refunded = 9000 (form 1040, line 73).

[subdriver97]

2) I have not heard people talk about the IRS seding money back - it is carried over.

It's a little more complicated than that.
- If there is insufficient taxable income (tax credit exceeds taxable income), then the remaining tax credit can be carried over to a future tax year.
- Anytime tax withheld exceeds the amount of payable tax in a tax year, then the IRS will issue a refund. It could be the case where the tax credit reduces the amount of payable tax such that the amount of tax withheld now exceeds the payable tax, in this case a refund is issued.

Examples:
Assumption: Payable Tax = $10,000, Tax Withheld = $8,000
Case 1. No Tax Credit, then tax payer owes IRS $2,000
Case 2. Tax Credit of $5,000, Payable Tax is reduced to $5,000, since the tax payer over withheld $3,000, then a refund of $3,000 is issued to the tax payer.
Case 3. Tax Credit of $12,000, Payable Tax is reduced to $0, and a tax credit of $2,000 is retained for a future tax year, since the tax payer over withheld $8,000, then a refund of $8,000 is issued to the tax payer.

http://energy.gov/savings/residential-renewable-energy-tax-credit

[subdriver97]

The way I now understand this test case (assuming no other credits, payments, or other taxes involved), using 2013 line numbers.

Tax liability = 10,000 (1040 line 46 -> Form 5695 line 14)
Solar tax credit available = 20,000 (form 5695 line 13)
Solar tax credit applied = 10,000 (form 5695 line 15 -> 1040 line 52)
Solar tax credit remaining for carryover = 10,000 (form 5695 line 16)
Remaining tax liability = 0 (form 1040 line 55 -> line 61)
Tax withheld = 9000 (form 1040 line 62 -> line 72)
Amount refunded = 9000 (form 1040, line 73).

Yes, this is correct.

Also note that there is no limitation on the amount of tax credit for a project that can be claimed. So if you have a $1M project, prepare for $300K tax credit....

[lkstaack]

Since we are back to the subject of federal taxes, does anyone have first or second hand knowledge of how an IRS Auditor treats improvements to a roof as part of a solar installation?

I have about 5 years remaining on my 30-year roof. As a minimum, it would make sense to re-lay paper on that section of the roof that hosts solar panels. I would like to deduct this expense as part of the solar installation. However, I wonder how the scrutiny of an IRS Agent would treat it?

I've mentioned this question to three solar salesmen. One said "we'll subcontract whichever roofer you like and add it to our bill so you can deduct it". Another said "This is what the IRS form looks like. Deduct what you want". Another said "We will probably add it to our bill; I'll ask my boss".

[sensij]

Since we are back to the subject of federal taxes, does anyone have first or second hand knowledge of how an IRS Auditor treats improvements to a roof as part of a solar installation?

I have about 5 years remaining on my 30-year roof. As a minimum, it would make sense to re-lay paper on that section of the roof that hosts solar panels. I would like to deduct this expense as part of the solar installation. However, I wonder how the scrutiny of an IRS Agent would treat it?

I've mentioned this question to three solar salesmen. One said "we'll subcontract whichever roofer you like and add it to our bill so you can deduct it". Another said "This is what the IRS form looks like. Deduct what you want". Another said "We will probably add it to our bill; I'll ask my boss".

I try to help where I can, but I think this question is one for you and a tax professional to figure out. I haven't found in this forum or any others discussion of any actual experiences... just lots of speculation and rationalization.

[Bikerscum]

Doesn't the IRS have some sort of help line you can call & ask questions?

[lkstaack]

I try to help where I can, but I think this question is one for you and a tax professional to figure out. I haven't found in this forum or any others discussion of any actual experiences... just lots of speculation and rationalization.

I was hoping that someone with actual IRS audit experience would answer. A tax professionals opinion would be more learned than mine, but at the end of the day it's still an opinion. The only opinion that matters is the one from the agent who is auditing you.