In 2019, we installed a solar system on our home in Maryland (our primary residence).
The Maryland Energy Administration has a rebate program for solar projects ($1,000).
https://energy.maryland.gov/residential/Pages/incentives/CleanEnergyGrants.aspx
The rebate does not come from the local utility, its from the state. We received the $1,000 check in 2019.
We did not receive a 1099-G from the state of Maryland. I called the state tax office, and the way the program is accounted for, they don't issue a 1099-G. I still think its taxable (at least at the Federal level). What is the right way to account for the $1,000?
I'm also claiming the "Solar Tax Credit" at the federal level (the investment tax credit), 30% of the cost of the solar system. From my own research, it seems the best (most correct) way to account for this would be to subtract the $1000 rebate from the overall cost of the system, and then claim the credit on that amount.
For example: if the cost of the system was $10,000, I would claim a 30% credit on $9,000 (credit of $2,700, instead of $3,000).
The alternative would be to claim the 30% credit on all $10,000, and then include the $1,000 as income. I can't figure out how to do this in TurboTax.
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You do not owe taxes to Maryland nor the IRS for the $1,000 rebate that you received. It is a discount incentive for utilizing the Solar Panels.
Secondly, you do not have to deduct the Maryland rebate from your cost. The instructions for line one of form 5695 says "Enter the amounts you paid for qualified solar electric property". It does not indicate any adjustment for any other credit.
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