Tax Credit Question

marsofold
marsofold Solar Expert Posts: 45 ✭✭
in General Solar Power Topics #1
What formal proof of UL certification is accepted by the IRS? I have a copy of Kyocera's dedicated page of UL certification for my solar panels. But Xantrex doesn't seem to have one for the XW-MPPT60-150 solar controller or for my Prowatt SW2000 inverter. There is a mention of UL certification at the bottom of Xantrex's user manuals, but no big clear page like Kyocera does. Are the last pages of the user manuals sufficient? Is there anything else my CPA should know to get me the 30%? federal tax credit? Thanks,

marsofold
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  • Blackcherry04
    Blackcherry04 Solar Expert Posts: 2,490 ✭✭✭
    #2
    Re: Tax Credit Question

    The IRS does not require you to submit anything but their form. When you do your taxes you submit Form 5695 and take the tax credit on your 1040. If you get audited you would have to produce the invoices for the equipment and all associated costs that you took on the deduction.
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  • Photowhit
    Photowhit Solar Expert Posts: 6,006 ✭✭✭✭✭
    #3
    Re: Tax Credit Question

    The is a stipulation that the deduction can be taken the year installed/put in service. Not before... just in case...
    Home system 4000 watt (Evergreen) array standing, with 2 Midnite Classic Lites,  Midnite E-panel, Magnum MS4024, Prosine 1800(now backup) and Exeltech 1100(former backup...lol), 660 ah 24v Forklift battery(now 10 years old). Off grid for 20 years (if I include 8 months on a bicycle).
    - Assorted other systems, pieces and to many panels in the closet to not do more projects.
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  • jagec
    jagec Solar Expert Posts: 157 ✭✭
    #4
    Re: Tax Credit Question

    This IRS doesn't care if your equipment is UL certified. Your inspector and the utility company probably will.

    Even more oddly, the only thing that the IRS does need to know is the total cost. A single field, usually tens of thousands of dollars, with no supporting documentation. Keep your receipts in case they audit you, of course...
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  • Blackcherry04
    Blackcherry04 Solar Expert Posts: 2,490 ✭✭✭
    #5
    Re: Tax Credit Question

    We do still have a Voluntary Tax System here. The honesty is on you to make true deductions under the tax law. The IRS has the job of accepting it or challenging the deduction. The burden of proof is on you and so are the penalty's and they can be ugly. It now takes 1-2 years for the computers to flag the returns in question and that depends on how they have operands set on the database.

    While the Solar Deduction is a non-refundable tax credit, it works in your favor. Example : Solar Credit $10,000 Tax Liability $6,000, Amount of tax deducted from your pay $4,000. You would get the $4,000 back from your pay in a refund and the $4,000 left on the credit would be carried forward till next year. Yeah, it's swapping dollars, but it's a real deduction.

    I am retired and do not have the Income to off set any more, so I created some by taking IRA money ( un-taxed ) and moved it into a Roth IRA and used the tax credit to pay the tax. The only requirement is it has to be used by 2016.
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  • sofasurfer
    sofasurfer Registered Users Posts: 9 ✭
    #6
    Re: Tax Credit Question

    I don't want to sound like I just rolled off the turnip truck but exactly what is a tax credit? An example is this ad...
    5,170 Watt Grid Tie Solar power Kit.
    $16,098.85 Free Shipping to 48 states!
    $11,269.19after 30% Fed rebate!

    Is the mentioned rebate the same as the much talked about tax credit? Or is the credit different? Where does the rebate come from if it is not a credit? Doesn't a 30 percent tax credit just mean that you can knock 30 percent of the system cost off your taxable income?
    Please explain what a tax credit means to me in actual money in my pocket.
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  • vtmaps
    vtmaps Solar Expert Posts: 3,741 ✭✭✭✭
    #7
    Re: Tax Credit Question
    sofasurfer wrote: »
    5,170 Watt Grid Tie Solar power Kit.
    $16,098.85 Free Shipping to 48 states!
    $11,269.19after 30% Fed rebate!

    Is the mentioned rebate the same as the much talked about tax credit? Or is the credit different? Where does the rebate come from if it is not a credit? Doesn't a 30 percent tax credit just mean that you can knock 30 percent of the system cost off your taxable income?
    Please explain what a tax credit means to me in actual money in my pocket.

    It is NOT a rebate. It is NOT a deduction on your taxes. It is a credit on your taxes. It is also a nonrefundable credit, which means it can only be used to pay taxes you owe.
    --vtMaps
    4 X 235watt Samsung, Midnite ePanel, Outback VFX3524 FM60 & mate, 4 Interstate L16, trimetric, Honda eu2000i
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  • BB.
    BB. Super Moderators, Administrators Posts: 33,613 admin
    #8
    Re: Tax Credit Question

    And, many times, you can carry credits forward to the next year(s). Say you get a $1,000 Fed tax credit and have $500 in taxes, it would take two years to "receive" the entire credit.

    Also, tax credits may end... For example, I think the current credit ends in 2016--so you must zero out the credit in the next ~4 years to use it.

    And, it appears at this time, that business credits for solar installs/lease back schemes can dramatically reduce the cost of installing a GT Solar power system if there is a leasing company in the middle. The "company" can do all sorts of (apparently legal) internal paper work and reduce your out of pocket expenses by upwards of 60% (or even more?) using "creative accounting".

    I don't like leasing for various reasons (long, complex contracts, confusing terms, some "charge you" at reduced rates for power, etc.)--But they are hard to ignore.

    -Bill "no tax guy" B.
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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  • Photowhit
    Photowhit Solar Expert Posts: 6,006 ✭✭✭✭✭
    #9
    Re: Tax Credit Question

    If Bill is the "no tax guy" then I'm the tax idiot, heck I have to refile this year since I forgot about a proprty I sold...

    ...my understanding was so long as you installed by 1216 and filled out the proper form, the credit carried forward,

    Whit - "the tax idiot"
    Home system 4000 watt (Evergreen) array standing, with 2 Midnite Classic Lites,  Midnite E-panel, Magnum MS4024, Prosine 1800(now backup) and Exeltech 1100(former backup...lol), 660 ah 24v Forklift battery(now 10 years old). Off grid for 20 years (if I include 8 months on a bicycle).
    - Assorted other systems, pieces and to many panels in the closet to not do more projects.
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  • TnAndy
    TnAndy Solar Expert Posts: 249 ✭✭
    #10
    Re: Tax Credit Question
    vtmaps wrote: »
    It is NOT a rebate. It is NOT a deduction on your taxes. It is a credit on your taxes. It is also a nonrefundable credit, which means it can only be used to pay taxes you owe.
    --vtMaps

    Correct-a-mundo. Is is NOT a rebate.....that is sales hype, or ignorance.....hard to tell exactly.

    It is NOT a deduction. A deduction reduces your taxable income. Say you earn 50,000 and have a deduction of 10,000....you would pay tax on the 40,000 ( not counting personal exemptions and all that type thing )

    But a CREDIT is: You earn 50,000, and your tax when all is said and done, say is 8,000 ( just for example ), then the CREDIT comes off the TAX dollar for dollar.....you have a 5,000 credit, then end up paying only 3,000.

    A CREDIT is usually WAY more valuable than a DEDUCTION is, because of the fact it come off the tax amount, not the total income amount.
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  • BB.
    BB. Super Moderators, Administrators Posts: 33,613 admin
    #11
    Re: Tax Credit Question

    Also note--Many tax credits/breakers are income specific--If you make over ~$100,000 or so--Many of them start to phase out. And there is the Alternative Minimum Tax which reduces deductions and such (don't know specifically about the solar tax credits).

    Make sure you understand how they affect YOU before counting on the various tax breaks (and sometimes income implications for FIT and other cash payments back to the owner).

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
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  • stillchillin
    stillchillin Registered Users Posts: 59 ✭✭✭
    #12
    Re: Tax Credit Question

    my two cents, more if your grid tied. My state Vermont gives a 10% tax credit in addition to the 30% federal credit but you must be grid tied.
    18- 235 W Kyocera panel, 12- 4-KS-25PS Rolls 1350 Ah, Magnum MS4448PAE, ME RC50, ME AGS, Outback FM 80, Generac 8KW LP generator, 6.5 Honda Portable generator
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