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yoli
Returning Member

Home office with solar panels electricity expense

I used to expense 15% of my home electricity bill as I used a room in my home as an office, however we installed solar panels a couple years ago and our electricity bill is now minimal. 

How do I reflect in my business expenses the fact that I continue to use electricity that is no longer provided by the local utility company, but by my solar panels?

 Is it fair to continue to expense approximately the same amount as in prior years?

4 Replies
JohnW15
Intuit Alumni

Home office with solar panels electricity expense

No, you wouldn't want to expense the same amount (for electricity) as in prior years.

You suggest that, although solar panels cause your electricity bill to be minimal, there is still an electricity bill.  Just use the appropriate percentage of that bill -- 15%, if that still holds.

yoli
Returning Member

Home office with solar panels electricity expense

Thanks for the prompt answer, John. There's a logic in the approach you suggest, however it doesn't account for the fact that there's a significant upfront investment on my part and in doing so I've become my own electricity provider. It would appear fair that, as far as my business is concerned, it pays a going market rate, rather than a mere ~5% of what it'd have to pay to the utility company.

Or is that not how the IRS would see it?
JohnW15
Intuit Alumni

Home office with solar panels electricity expense

I understand what you're saying, and it makes sense... from an IRS perspective, I think they'd allow only the smaller amount.  That's just my thinking, and if you look at various IRS pubs I don't think you'll find a satisfying answer, one way or the other.  I think your risk in reporting the higher amount would be minimal, as long as there's nothing really hinky about your Schedule C or Home Office Expenses.  On a (sorta) unrelated subject -- are you claiming the energy credit for the solar panels, assuming you're eligible?
yoli
Returning Member

Home office with solar panels electricity expense

Thanks, John!
Yes, we did deduct the 30% federal tax credit from our taxes in 2017, the year we installed the solar panels.
Indeed, I have not come across a definitive answer to that particular question, yet to me, it seems only fair that my business pays market rate for what it receives.

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