(FL) Advice Needed With Solar Panel Tax Credit For Solar Panels Installed and Paid for in 2022…But Not Turned on Until 2023?

Submitted by Practical-Mud-1 t3_zzdvjj in personalfinance

(FL) My solar is installed, paid for, and approved by City Inspection…Electric Company won’t approve to use until next week (2023). Do I get tax credit for my 2022 taxes? Or do I have to wait until 2023?

Any advice or guidance on if I get to claim my 30% Solar tax credit in 2022 or 2023?

I feel like all my paperwork is showing 2022 so I’ll be fine to claim in 2022 taxes, but it technically won’t be turned on until 2023…so I’m not sure how that works 🤔

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mlachick t1_j2b18hf wrote

I'm in the exact same boat, and I plan to take the tax credit in 2022. The rules specifically say they have to be installed. They do not specify that they must be "placed in service."

FYI - I am a tax professional, and I don't feel like this is a high-risk position.

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SirMontego t1_j2bcawc wrote

The "placed in service" date is the date to determine the applicable tax credit percentage. IRC section 25D(g).

The "when the original installation of the item is completed" date is the date to determine the taxable year to claim the tax credit. IRC section 25D(a)(1) and (e)(8)(A), with a minor exception specified in (e)(8)(B).

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[deleted] t1_j2bx2h4 wrote

[deleted]

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SirMontego t1_j2by1dv wrote

>But it says when installation is completed, not when placed into service?

The law uses both terms. Just click the link and read the law.

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Bouncing-balls t1_j2bz8ey wrote

If they are not turned on is the installation really complete?

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SirMontego t1_j2cvaaa wrote

Probably yes.

The IRS hasn't issued guidance on what "when the original installation of the item is completed" means. However, basic statutory construction says that it does not mean "placed in service" because those two terms appear in 26 USC section 25D.

To me, "placed in service" means everything is done and the panels are producing. Accordingly, "when the original installation of the item is completed" must mean something before "placed in service" and to me, the only reasonable thing is not yet turned on or not yet approved or given permission to operate by the utility. But that's just my guess.

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SirMontego t1_j2bbner wrote

The law says that the taxable year to claim the tax credit is the year "when the original installation of the item is completed."

Accordingly, if the solar is completed being installed in 2022, the taxpayer would claim the tax credit for the entire cost of the solar system on his or her 2022 taxes, which typically would be filed in April 2023. Here's a comment I made a few months ago that gives more details: https://www.reddit.com/r/solar/comments/yo7g32/can_i_get_the_tax_credit_this_year_if_still/ivdsugt/?context=3

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