Trying to confirm 30% tax credit on _full_ invoice

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aj164
aj164 Solar Expert Posts: 122 ✭✭✭
With the latest stimulus package, I've heard a lot of talk about the 30% tax credit for solar. At least one installer is advertising that you can now get your tax credit on 30% of the full invoice amount! Previously, you could only take the credit on money you spent out-of-pocket; you could not get credit for any local or state incentives or rebates.

This is a very big point, because some utility rebates are huge. If you're getting $12,000 back from the utility, you could get an additional $3600 tax credit if this is true.

Anyone else know for certain? I'm trying to make sure before I make promises to customers. I tried to read the bill online, but I can't get a concrete answer from that, either. The part about getting your tax credit up front, as a grant, I think I've confirmed, but 30% of full invoice ??

Thanks,
AJB

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  • halfcrazy
    halfcrazy Solar Expert Posts: 720 ✭✭✭
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    I believe he is right the federal tax credit is off full invoice before rebates. but you had better wait for someone who knows tax law better then I. We dont have any state rebates here so i havent looked deeper
  • BB.
    BB. Super Moderators, Administrators Posts: 33,502 admin
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    In the past, you could not get credits or rebates on funds you did not spend (or where rebated by a third party)--unless you took the cash back as "income".

    I would be very careful about practicing "aggressive" tax avoidance. Unless you are picked for a cabinet position... Then the "I forgot" rule applies.

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
  • Hoonose
    Hoonose Registered Users Posts: 16
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    The latest stimulus bill gives you a 30% Federal tax credit, based on the total cost of the system. Previous to this the law was 30% of your out of pocket. This goes from good to 'too good to be true'!


    Bullet #2:
    http://seia.org/galleries/pdf/exec_summary_of_final_bill_2_17_09.pdf

    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/17/BUHK15VO9T.DTL
  • xiphias
    xiphias Solar Expert Posts: 52 ✭✭✭✭
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    Related question.

    Is it correct that the tax credit can only be claimed up to the amount of your tax liability for that year, but that unused credits can be carried forward for three years?

    For example, say I get a $10,000 federal tax credit for my PV install in 2009. But my tax liability (amount I owe the IRS) for tax year 2009 is only $3000. I can use the $3000 to get my credit, and carry forward the remaining $7000 to the 2010 and 2011 tax years.

    In other words, Uncle Sam will not send me a check for the full $10,000. It's a credit to be used against my tax liability, not a rebate.
  • Hoonose
    Hoonose Registered Users Posts: 16
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    Re: Trying to confirm 30% tax credit on _full_ invoice
    xiphias wrote: »
    Related question.

    Is it correct that the tax credit can only be claimed up to the amount of your tax liability for that year, but that unused credits can be carried forward for three years?

    For example, say I get a $10,000 federal tax credit for my PV install in 2009. But my tax liability (amount I owe the IRS) for tax year 2009 is only $3000. I can use the $3000 to get my credit, and carry forward the remaining $7000 to the 2010 and 2011 tax years.

    In other words, Uncle Sam will not send me a check for the full $10,000. It's a credit to be used against my tax liability, not a rebate.

    That is my understanding, but I would also check with my accountant of course.
  • BB.
    BB. Super Moderators, Administrators Posts: 33,502 admin
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    Three years ago, when I installed my system, I was limited in Federal deductions by AMT (as I recall)... And I was able to carry the deduction forward to the next year (Turbo Tax took care of it auto-magically).

    -Bill
    Near San Francisco California: 3.5kWatt Grid Tied Solar power system+small backup genset
  • aj164
    aj164 Solar Expert Posts: 122 ✭✭✭
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    Yes, but I believe another point in the bill says you can apply for the tax credit as a grant instead. You get the money up front instead of waiting for the next tax cycle (and potentially having to carry forward).

    xiphias wrote: »
    Related question.

    Is it correct that the tax credit can only be claimed up to the amount of your tax liability for that year, but that unused credits can be carried forward for three years?

    For example, say I get a $10,000 federal tax credit for my PV install in 2009. But my tax liability (amount I owe the IRS) for tax year 2009 is only $3000. I can use the $3000 to get my credit, and carry forward the remaining $7000 to the 2010 and 2011 tax years.

    In other words, Uncle Sam will not send me a check for the full $10,000. It's a credit to be used against my tax liability, not a rebate.
  • System2
    System2 Posts: 6,290 admin
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    "...The part about getting your tax credit up front, as a grant, I think I've confirmed..."

    Can someone please elaborate on this a tad more? Because my understanding of a "grant" is that this does not have to be paid back, yet, if applied to your future years taxable income this becomes a slightly more complicated bit of accounting.......

    regards,

    Semper Fi!

    USMC_Buckaroo 8)
  • xiphias
    xiphias Solar Expert Posts: 52 ✭✭✭✭
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    Re: Trying to confirm 30% tax credit on _full_ invoice

    Here's what I've found about that...

    http://www.seia.org/galleries/pdf/guide_to_recovery_act_2_17_09.pdf

    This refers you to language in the legislation, specifically Div. B, Sec. 1603, p. 153 of the final bill. Which says that you can get a grant from the Treasury in lieu of tax credits.

    See here:

    http://www.seia.org/galleries/pdf/Recovery_Bill_Division_B.pdf

    What I also read somewhere is that more info will need to be forthcoming from the Dept of the Treasury.

    This does indeed sound like a true grant. Maybe put in place to avoid the problem of people not being able to claim all the credits in the years allotted, and/or to make sure that people reluctant to invest because they'd have to spread out the credit can simply get the money back immediately.