Federal Tax Credit (if I buy materials?)

[desmo907]

I may be adding on to my current system (from 2012) and using a legit person to do the install, etc.
However I may buy the panels and microinverters (to match what I have).

I assume that when I complete my US Federal tax forms,I just total all material costs (I incurred) as well as the installers' costs and I can still get the same 30% tax credit..

Thoughts?

[organic farmer]

I live on a farm, so nearly every expense I have is a tax write-off in one manner or another.

When we were installing our solar power system, it took us three years to gradually assemble al the stuff. We used the tax credit each year, for that years expenses.

[desmo907]

I live on a farm, so nearly every expense I have is a tax write-off in one manner or another.

When we were installing our solar power system, it took us three years to gradually assemble al the stuff. We used the tax credit each year, for that years expenses.

Thanks. I assumed you did not need 1 invoice from an installer...and that I can total various invoices.

[foo1bar]

Thanks. I assumed you did not need 1 invoice from an installer...and that I can total various invoices.

I did not see anything in the forms that would require one invoice.
I had quite a few invoices/receipts when I did my installation.

What organic farmer has said about taxes is wrong/misinformed for residential installations (probably business too - but I haven't spent the time to research it fully)
You can not use the 30% tax credit each year for that year's expenses. The entire credit is applied to the tax year when the system is put into operation.
But please do not just rely on my word - read the IRS documentation yourself.
"costs are treated as being paid when the original installation of the item is completed" - instructions for form 5695 (2017 version)

[organic farmer]

I did not see anything in the forms that would require one invoice.
I had quite a few invoices/receipts when I did my installation.

What organic farmer has said about taxes is wrong/misinformed for residential installations (probably business too - but I haven't spent the time to research it fully)
You can not use the 30% tax credit each year for that year's expenses. The entire credit is applied to the tax year when the system is put into operation.
But please do not just rely on my word - read the IRS documentation yourself.
"costs are treated as being paid when the original installation of the item is completed" - instructions for form 5695 (2017 version)

So you do agree that as each item is installed, it can be included in your tax filing.

[azdave]

Each time this subject comes up the only thing we all agree on is that no one should be getting tax advise from us.

[desmo907]

Each time this subject comes up the only thing we all agree on is that no one should be getting tax advise from us.

Lol... i understand... I will call the guy who does my taxes too

[J.P.M.]

The U.S. fed. tax credit does not care who does the installation. The owner gets a 30 % tax credit for the amount they pay to someone else for materials, labor, freight, permits, engineering and to some unspecified limit, site prep. Just don't claim an exorbitant amount or an inflated amount for such things via mfgrs. rebates/kickbacks, etc. so as to inflate the claimed cost vs. the bottom line costs. That's illegal.

Also, to be eligible for a fed. tax credit, the system must use new material, that is, unused equipment. Read the tax code and then consult a qualified tax advisor.

[foo1bar]

So you do agree that as each item is installed, it can be included in your tax filing.

When installation is completed it is included in your tax filing for that tax year.
Only if you have multiple installation completions will it be over multiple years.
ex. 3kw system in 2015, another 5kw system in 2016, and add 8kw installed in 2017 would have expenses for each of those in their respective years.

When you say "three years to gradually assemble al the stuff" - it sounds like you bought parts of a whole system over a period of 3 years. And only in year 3 did you start producing power.
In that scenario I think it's clear from the instructions that all the costs would be credited on year 3's tax forms.

It also works the other way - If you're doing an install where it's powered on in Dec. 2017 but you pay the installer in Feb 2018, that payment still goes into the calculations for a 2017 tax credit.

[cebury]

When installation is completed it is included in your tax filing for that tax year.
Only if you have multiple installation completions will it be over multiple years.
ex. 3kw system in 2015, another 5kw system in 2016, and add 8kw installed in 2017 would have expenses for each of those in their respective years.

When you say "three years to gradually assemble al the stuff" - it sounds like you bought parts of a whole system over a period of 3 years. And only in year 3 did you start producing power.
In that scenario I think it's clear from the instructions that all the costs would be credited on year 3's tax forms.

It also works the other way - If you're doing an install where it's powered on in Dec. 2017 but you pay the installer in Feb 2018, that payment still goes into the calculations for a 2017 tax credit.

Not only is this a straight forward interpretation of of 5695 for residential installs it is also in line with official court rulings and IRS guidance for businesses with multiyear expensed and/or phased projects of the various types of energy efficiency credits like solar PV.

[Matrix]

So this statement about carry over is wrong?

If your federal tax liability is lower than the total amount of your ITC savings, you can still take advantage of it by carrying over any remaining credits to the following year.

found here in this explanation? Not challenging you folks, just getting ready to file my 2017 (the year I installed the vast bulk of my system) and I am sure that I will zero out it taxes owed before all of the amount of the credit on form 5695 is used up. Was thinking I could carry it over to 2018 filing?

[J.P.M.]

So this statement about carry over is wrong?


found here in this explanation? Not challenging you folks, just getting ready to file my 2017 (the year I installed the vast bulk of my system) and I am sure that I will zero out it taxes owed before all of the amount of the credit on form 5695 is used up. Was thinking I could carry it over to 2018 filing?

FWIW, my taxes are done by a CPA and then separately checked by my ex-wife who's also a CPA, with whom I have some mutual business interests. I carried the energy tax credit from my 2013 PV install forward for 2 subsequent tax years, 2014 and 2015 until the energy tax credit was exhausted. I've never been audited, but I'm pretty sure any unused federal energy tax credit can be carried forward.

[ButchDeal]

FWIW, my taxes are done by a CPA and then separately checked by my ex-wife who's also a CPA, with whom I have some mutual business interests. I carried the energy tax credit from my 2013 PV install forward for 2 subsequent tax years, 2014 and 2015 until the energy tax credit was exhausted. I've never been audited, but I'm pretty sure any unused federal energy tax credit can be carried forward.

you can carry forward but that is a different question. The OP is asking if he can count when he installed or purchased the equipment even though it was not put into service. The answer to that is no, you can start at point it was put into service.

[J.P.M.]

you can carry forward but that is a different question. The OP is asking if he can count when he installed or purchased the equipment even though it was not put into service. The answer to that is no, you can start at point it was put into service.

Agreed. Take the credit in the year the equipment is put into service.

[Matrix]

Thanks, I see the difference. What about if a system is purchased and put into service in a particular year, and the tax credit is taken, then in the following year the system is expanded and more components are added to that system that was installed the previous year. Can an additional tax credit be taken for the new items only in the year of purchase for those items even though it was an addition to the existing system?