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How to cash in on the IRS’ Investment Tax Credit
Mar24

How to cash in on the IRS’ Investment Tax Credit

Anticipating that the solar-plus-storage market could experience the same type of expansion the PV market did in the last decade, the IRS recently updated an eligibility ruling for a 30 percent Investment Tax Credit (ITC) on renewable energy storage.   The updated rule, passed before the start of 2016, extends the 30 percent ITC until 2021 and aims to clear up some of the confusion with regards to when solar energy storage qualifies for the tax credit.   “The federal government does not want to incentivize people to arbitrage energy from the grid,” Senior Consultant at the Engineering consultant firm DNV-GL Mike Kleinberg explains. “You cannot charge from the grid in the evening and then discharge during the day to supplement your PV — and also qualify for the ITC, because you’re not then really charging from renewable energy.”   In order to accomplish this, the IRS dictated that in order to be eligible for the ITC, taxpayers must not draw more than 25 percent of stored electricity from the grid. Additionally, if they draw more than 25 percent of power from the grid during the first year of applying for the credit, they will not be allowed to collect any portion of the energy tax credit in later years even if the system improves and complies.   In order to prevent batteries charging more than 25 percent from the grid, homeowners have taken to installing inverters on both their PV systems and their AC/DC power systems, linking them to a site master controller that monitors when and how fast storage units charge.   While the updated 2015 rule might seem more strict than the original one set forth two years earlier (which was much more vague about solar battery two-way grid charging) it also expands its definition of what constitutes “storage technology”, allowing for greater flexibility when applying for the credit.   For example, smart water heaters or ceramic heaters that know the weather and draw 25 percent or less from the grid would qualify....

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reduce your tax bill, invest in solar panels

April 15th, the most dreaded day for Americans since its the last day to pay off the IRS. How much did you pay Uncle Sam this year? Some Americans paid less to the IRS this year by taking advantage of the generous tax credits given to homeowners and businesses to install solar panels that generate electricity or heat water. Before 2009, individuals were capped at a $2,000 tax credit maximum, but this year was historic in terms of how much money people are receiving for installing renewable energy. Individuals and corporations can take a full 30% of the final installed cost of the system as a tax credit against your tax bill. Deductions, reduce your taxable income, tax credits on the other hand are a dollar-for-dollar reduction of your tax liability. It’s quite simple to claim the investments you made in solar panels or wind turbines, take a close look at the Tax Credit section on the 1040, you’ll notice a renewable energy section in which you can enter the credit you qualify for. If you’re interested in learning more about the tax credits you qualify for installing renewable energy check out...

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