Today TaxMama hears from Jean in Glendale, CA.
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She says, “I installed a photovoltaic solar system on our home last spring. We received an $11,000 “incentive” grant from the City. Now, the City has sent us a 1099-G. I thought solar installations were not taxable.”
Hi Jean,
That’s an excellent question.
You’re right, the incentives are not taxable – at least not when you get the money for solar systems on personal property.
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But the grants are taxable for business.
So if you are using part of your home for business, multiply the grant by the business percentage of your office in home.
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That amount will be taxable.
Remember, when you prepare your income tax returns this year, you may also have access to an IRS tax credit.
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(California’s credit seems to have expired.)
Reduce your total costs by the $11,000 you have received from your city.
Use Form 5695 for your IRS credit
https://www.irs.gov/pub/irs-pdf/f5695.pdf
And remember, you can find answers to all kinds of questions about energy credits and other tax issues, free. Where? Where else? At TaxMama.com
[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]- Ask TaxMama :: Where taxes are fun and answers are free
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- Database for State Incentives for Renewable Energy :: Analysis of the Taxability of Solar Incentive Payments
- IRS Form 5695 :: Residential Energy Efficient Property Credit
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