TaxAct question-solar income

[EastWest Gal]

I have been using a CPA for taxes for years. In retirement and with a paid off house, we take the standard deduction. I am considering doing my own taxes going forward. I'm experimenting with TaxAct and found the software easy to use, but this is a pretend year. I'm waiting for our CPA to finish our return and see if I get the same numbers.

One thing that has stumped me is miscellaneous income. We get money from our solar company twice a year, in addition to low electricity bills, especially in the summer. The amount goes on Schedule 1, line 8, I think line 8z. But I cannot find in the TaxAct program how to enter such income.

I also realize that the solar company should be issuing us a 1099-MISC, which they have not been doing. We'll be calling them today.

Any thoughts?

 

[VanWinkle]

Look for a tab that says "other income" under the misc income tab and it ends up on line 21 of the 1040. Not subject to medicare or SS taxes.

 

[Alan]

It never even occurred to me that being paid for solar energy was a taxable item. The monthly bill I receive from our utility company shows amount and cost of electricity consumed plus amount and payment of electricity exported. The result is that I have much lower electricity bills but am not making a profit.

 

[djsander]

It never even occurred to me that being paid for solar energy was a taxable item. The monthly bill I receive from our utility company shows amount and cost of electricity consumed plus amount and payment of electricity exported. The result is that I have much lower electricity bills but am not making a profit.

Only my guess, but the IRS has determined regardless of what your electric bill is the electric company is paying you money and it is income. The electric company is getting a tax deduction on their side for paying you. The IRS always has a way of getting your money. They don’t care if you are making a profit they only care that you are being paid.

 

[Alan]

Only my guess, but the IRS has determined regardless of what your electric bill is the electric company is paying you money and it is income. The electric company is getting a tax deduction on their side for paying you. The IRS always has a way of getting your money. They don’t care if you are making a profit they only care that you are being paid.

I live in England and the electric company here is not getting a tax deduction from the IRS or HMRC. (I still do pay and file US taxes as a USC living overseas which is why I am interested in this topic)

I didn’t realize that electric companies in the USA are subsidized for solar panel electricity export. That does make a difference I’m sure.

 

[djsander]

I live in England and the electric company here is not getting a tax deduction from the IRS or HMRC. (I still do pay and file US taxes as a USC living overseas which is why I am interested in this topic)

I didn’t realize that electric companies in the USA are subsidized for solar panel electricity export. That does make a difference I’m sure.

As I said only a guess on my part. The tax codes are so complicated anymore that no telling what is deductible by the companies, but I would think if they pay you or do net metering then there is some benefit to the electric company tax wise. I know there is a push to get rid of net metering as the electric company’s aren’t getting the revenues for system maintenance that they get when you pay them cash. Net metering is if you use 1 unit and you produce 1 unit for the grid then it’s a wash. I’m sure with 70,000+ pages of tax code it gets complicated pretty quick. I know I use to have a 2 page tax form. Now with just a few extras my tax return is a small book of form, calculations and schedules.

Long post, but I would like to know more about the ins and outs of solar. So far even in the desert southwest it makes no sense as we are very conservative with our power useage.

 

[SecondCor521]

I have been using a CPA for taxes for years. In retirement and with a paid off house, we take the standard deduction. I am considering doing my own taxes going forward. I'm experimenting with TaxAct and found the software easy to use, but this is a pretend year. I'm waiting for our CPA to finish our return and see if I get the same numbers.

One thing that has stumped me is miscellaneous income. We get money from our solar company twice a year, in addition to low electricity bills, especially in the summer. The amount goes on Schedule 1, line 8, I think line 8z. But I cannot find in the TaxAct program how to enter such income.

I also realize that the solar company should be issuing us a 1099-MISC, which they have not been doing. We'll be calling them today.

Any thoughts?

I'd first try to determine if the payment is considered a refund or rebate. If so, it would not be reportable or taxable. If it is a payment for services or goods (electricity in this case), then it should be reported somewhere. Perhaps Schedule 1 line 8z. Perhaps on a Schedule C. Perhaps on a Schedule E. Perhaps even Schedule F.

The solar company may not be required to issue you a 1099-MISC. Those are generally only issued if the total amount of payments over the year are over $600 (which they may or may not be in your case).

If the income should be reported, it should be reported even if the company doesn't issue a 1099-MISC. Meaning if they're paying you $300 and it's not a rebate/refund, you should still reflect the $300 of income on your return even having not received a 1099-MISC.

 

[RE2Boys]

Interesting private letter ruling by IRS concerning utility company subsidies for solar system, solar energy credits, and receiving payment for sale of electricity to utility. May or may not be applicable to each individuals situation.

https://www.irs.gov/pub/irs-wd/1035003.pdf

 

[EastWest Gal]

It is neither. It appears on last year's schedule 1, line 8z. I just wasn't sure how TaxAct handles it. Since the amount is under $600, we didn't get a 1099. I wanted to make sure it wasn't handled as self-employed income. Since the checks were made out to both of us, I just divided the amount in half and entered half on each of us. It looks like it wasn't handled as self-employment income, so I think it is all good. We'll see how it works out. Thanks for the help.

 

[pjm-7]

With my solar system I generate credits that go into a "bank" to draw from in the future. If I generate more electricity than I use the extra energy credits are held until I use it in a later month. It is my energy generated for my use. I do not get any cash payments.

 

[Alan]

With my solar system I generate credits that go into a "bank" to draw from in the future. If I generate more electricity than I use the extra energy credits are held until I use it in a later month. It is my energy generated for my use. I do not get any cash payments.

That is how it works for my daughter as well.