Form 5695

[SensibleandHourly]

Hello Community, 

I just took on a new client who had questions about Form 5695 for Solar Panels that she had installed at her home. (Not ON her home). Apparently, they are shoddy, haven't worked well, and there have been questionable business practices that are being investigated as far as the appropriate disclosures and ethical practices. In the meantime, the client was told by another tax advisor that she didn't qualify for the Residential Energy credit. Yet, I've been reading the instructions for Form 5695, and I can't figure out why she wouldn't. Any thoughts on common misunderstandings of this credit or reasons why this client shouldn't at least get this credit for her attempt at investing in cleaner energy sources, even if the particular company she ended up with hasn't proven to be all that reputable? 

As always, thank you to the collective wisdom of the group!!! Dawn. 

[jeffmcpa2010 · Accepted solution]

I don't believe the panels have to be "On the Home" but I believe they do have to be powering the residence (Or connected to the utility grid through the homes power meter with a 2 way meter). 

I would "think" she qualifies, unless the system does not currently qualify as the installation being completed and operating? If it's not operating completely or fully connected might the argument being made that it is not in service? I haven't read all the 5695 rules, but it seems that there would be some kind of definition of when a system meets the qualification for installed and working which might trigger the credit eligibility.?

I know that was kind of some rambling thoughts, but hope it gives you somewhere to look.

[TaxGuyBill]

I'll throw out a few ideas:

1. You said AT her home.  Are the panels connected to her home meter, and therefore powering her home?
2. The taxpayer has no tax, so the other tax preparer meant that there would be no current year benefit due to it being a non-refundable credit.
3. The other tax preparer was mixing it up with the $500 credit, and the taxpayer had already maxed out the $500 credit.
4. The other preparer had some other bit of information that we don't know (although I can't really think of what that could be).
5. The other tax preparer was wrong.

[SensibleandHourly]

Thank you! I believe there is an 'inverter' of some sort..... Yes, this does help think through the next round of questions and how I pay attention when reading the instructions. Too bad the company didn't have to provide some sort of form. 

Thank you, again! 

[SensibleandHourly]

Thank you for the response. I do think there is a possibility the other preparer might have been just as confused as I am. 😉 I'll research the details on the energy credit, as well as the infrastructure credit and how they differ.  And if anything can be carried forward.

Cheers, Dawn. 

[jeffmcpa2010]

I do KNOW that if they qualify for the solar credit the excess can in fact be carried forward. 

[PATAX]

Had this credit last year and pro series did do a good job on this .