Is over production taxable?

strawbale
strawbale Solar Expert Posts: 31 ✭✭✭
We have a 7.7 KWh system that produces about double what our family of four uses. In 2011 I got a check of just under $600. from our electric company. Do I need to report this as income on my federal tax form? If so how/where? I suppose the same question could apply to SRECs.

Strawbale

Comments

  • niel
    niel Solar Expert Posts: 10,300 ✭✭✭✭
    Re: Is over production taxable?

    i never thought of this, but technically it is profit and as such is reportable to our taxing bodies.
  • strawbale
    strawbale Solar Expert Posts: 31 ✭✭✭
    Re: Is over production taxable?

    I realize the minority of us receive a check from our electric company, but I would think SRECs "income" would be handled the same way. Any help from our tax gurus out there? I remembered an additional payment, so I actually received just over $750. last year.

    Strawbale
  • RCinFLA
    RCinFLA Solar Expert Posts: 1,484 ✭✭✭✭
    Re: Is over production taxable?

    If it is taxable then you should be able to depreciate at least some of your equipment investment.

    That would open up a whole new opportunity to offset installation cost. Then there is the question if you sell your house would you then be prohibited to rollover any capital gain into your next primary resident house.

    Lots of questions.
  • Thomas
    Thomas Solar Expert Posts: 291
    Re: Is over production taxable?

    If it becomes official, and not absorbed by the power company, I think, it would be a new .9% tax.
    Always troubleshoot with adequate sunlight.  Hi Ho Hi Ho
    2.3kW [10] Enecsys SMI-240-60 micro inverters

  • Thomas
    Thomas Solar Expert Posts: 291
    Re: Is over production taxable?

    That may even be a liability or a tax write off for the power company, go figure.
    Always troubleshoot with adequate sunlight.  Hi Ho Hi Ho
    2.3kW [10] Enecsys SMI-240-60 micro inverters

  • TnAndy
    TnAndy Solar Expert Posts: 249 ✭✭
    Re: Is over production taxable?

    I asked my tax guy ( and he is pretty good, has a system himself ), and he reply was don't worry about it unless it gets into thousands, OR you get 1099'ed for it. Then haul out your receipts for the install and start deducting away, and you'll end up with no liability for many many years, if ever.

    I got $101 bucks back this year, and figure to get about 500 next year. ( Increased system fall 2011 ) SRECs aren't an option here.
  • strawbale
    strawbale Solar Expert Posts: 31 ✭✭✭
    Re: Is over production taxable?

    Very helpful, TnAndy, also because your tax guy has a system himself.

    Strawbale
  • Blackcherry04
    Blackcherry04 Solar Expert Posts: 2,490 ✭✭✭
    Re: Is over production taxable?

    From what I have read it's a gray area. 1) If you claimed the 30% tax credit as a " Residential Solar Home " it cannot be considered for any deductions or deprecation . If you have a Home Office ( I do ) then you cannot take the Residential tax credit as I read it. The but of it is if you use accelerated deprecation, you may come out ahead. Rebates have not been taxed, but SREC's have. Over Production becomes another issue. They don't like Home Offices anyway, thats their problem.

    Whatever you do, it will be 1-2 years or so before you get the letter, if ever. I use a CPA and I still get it from them. I am taking the 30% residential credit and let's see how they have their computer system set up. A 1099 would definitely set off a red flag. It all depends how they have their " And's and If's " set on the data base for screening tax records.
  • strawbale
    strawbale Solar Expert Posts: 31 ✭✭✭
    Re: Is over production taxable?

    I just got off the phone with my power company (PPL). I was told they do send out 1099's by the end of the January if the amount was more than $600. Since mine was $753. I should be seeing one in the next day or two. So I will be reporting this on my tax forms. Another reason to take a look at an electric car....

    Strawbale
  • niel
    niel Solar Expert Posts: 10,300 ✭✭✭✭
    Re: Is over production taxable?

    ouch, over by that much. just make sure it's under $600 next time and you're home free.
  • Blackcherry04
    Blackcherry04 Solar Expert Posts: 2,490 ✭✭✭
    Re: Is over production taxable?

    I went into November with 2019 KWH banked and bought a couple of space heaters to burn it off. I ran a couple new wire and receptacles for them. I looked a couple other ways to do it, but this ended up the cheapest and best for me. I got shafted by the gas company last January when the Public Service Commission let them put a $12.50 per month service charge on their bill above the cost of the gas. and it doubled my bill and knocked the heck out of my ROI.
  • peakbagger
    peakbagger Solar Expert Posts: 341 ✭✭✭
    Re: Is over production taxable?

    Beats the NH option, the utility never writes a check for surplus generation. You can build up a credit but if you close the account they keep it.
  • westbranch
    westbranch Solar Expert Posts: 5,183 ✭✭✭✭
    Re: Is over production taxable?

    check this out: http://www.sciencedaily.com/releases/2012/02/120201094956.htm from RSS feeds

    The tool uses an Excel spreadsheet, tied to real-time lending information and market fluctuations, to determine the worth of a PV system. An appraiser enters such variables as the ZIP code where the system is located, the system size in watts, the derate factor -- which takes into account shading and other factors that affect a system's output -- tracking, tilt and azimuth, along with a few other factors, and the spreadsheet returns the value of the system as a function of a pre-determined risk spread. The solar resource calculation in the spreadsheet is based on the PVWattsTM simulator developed by the National Renewable Energy Laboratory, which allows the spreadsheet to value a PV system anywhere in the U.S.

    "With PV Value™, appraisers can quickly calculate the present value of energy that a PV system can be estimated to produce during its remaining useful lifetime, similar to the appraisal industry's income approach," said Johnson. "Additionally, a property owner thinking about installing PV can now estimate the remaining present value of energy for their future PV system and what it could be worth to a purchaser of their property at any point in time in the event a sale of the property takes place before the estimated payback date is reached."
     
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    Cotek ST1500W 24V Inverter,OmniCharge 3024,
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  • TnAndy
    TnAndy Solar Expert Posts: 249 ✭✭
    Re: Is over production taxable?
    niel wrote: »
    ouch, over by that much. just make sure it's under $600 next time and you're home free.


    Not really.....they just don't 1099 for under 600.....that doesn't mean you aren't still liable for the taxes, and should you get a full blown audit, they could find it.....or should they audit the utility, they could find it.


    On deductions, no, you can't take a deduction on the 30% you got a federal credit for ( assuming you took it, and, who wouldn't ? ), but the OTHER 70% is fully deductible as a cost of producing income. Keep your install cost records for as long as you have the system in place.

    Just like you can't deduct the cost of any hobby UNLESS you produce income, then you can use the expenses to offset the income.

    Examples: I go bowling a lot, I can't deduct the cost of shoes/ball/lane fees normally....BUT should I win a $1,000 tournament prize, now I can go back and deduct a lot of those same costs, and probably really have no income.

    My wife teaches dance lessons one night a week at the senior center, and charges $4/head. She reports the income on a simplified schedule C, usually about 1,500/yr, and also the COST of producing said "income".....travel to and from the center, CD's she buys, license fees to the 3 different outfits that license you to actually play music in a public setting ( yeah...it's a rip ), dance sheets she hands out, and so on. She either breaks even, or goes slightly in the hole each year, but she does it for the exercise and being a social critter.