Climate Bill and Solar Tax Credits and Tax Liability

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Topic Author
Saving$
Posts: 2518
Joined: Sat Nov 05, 2011 8:33 pm

Climate Bill and Solar Tax Credits and Tax Liability

Post by Saving$ »

A few questions about the Solar Tax Credits in the new climate bill:

1. If it is accurate that the credits are not refundable, you need to have a tax liability equal to or greater than the credit to realize the credit. If towards November is looks like this would be a concern, can this be easily remedied by moving funds in one of the following strategies:
a. move funds from a Solo 401k into a Roth 401k, or is this not allowed until age 59.5?
b. move funds from a previous employer 401k into an IRA, then put some in a Roth (taxable event to create tax liability to use tax credits) and the balance into the solo 401k.
c. Other?

2. It seems the new Tax Credits include battery storage from solar and that the battery storage does NOT need to be installed concurrent with the solar panels. Is this accurate?

It seems the new credit is 30%, effective immediately and valid until 2032. Other than local /state/utility provider conditions & incentives that also factor in, what is the anticipated impact of this credit on solar & battery backup pricing? Is is advisable to install immediately or to wait? The best quote I have indicates a payback period of 12.1 years for panels only under the old 26% tax credit, so there is some opportunity cost to waiting.
Topic Author
Saving$
Posts: 2518
Joined: Sat Nov 05, 2011 8:33 pm

Re: Climate Bill and Solar Tax Credits and Tax Liability

Post by Saving$ »

Bumping for a response
jpelder
Posts: 1106
Joined: Mon Jan 26, 2015 2:56 pm
Location: Concord, NC

Re: Climate Bill and Solar Tax Credits and Tax Liability

Post by jpelder »

The tax credit isn't refundable, but it can carry forward to subsequent years. So yes, you can artificially generate taxable income via Traditional IRA/401k withdrawals or Roth conversions, or you can just let the credit roll over from year to year until you use it all.

The battery storage credit does not have to be taken with the panels. You can claim one or the other in any particular year. The battery must have 3 kW or more of capacity.

Consumer Reports article about it (if you have a subscription): https://www.consumerreports.org/home-ga ... 771685058/
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