SRECs generated from home solar syste

[vdots]

I installed solar panels on my home roof in 2019. I generated Solar Renewable Energy Credits (SRECs) which were sold in energy credits market by a SREC trading company on my behalf. Are those sales taxable, federal or Maryland state? If so, should I be getting some sort of 1099 from my trading company that made the payments to me?

[JohnW152 · Accepted solution]

Yes, Solar Renewable Energy Credits are taxable, on both your federal and state returns.

The sales are typically reported on Form 1099-MISC.  The form is generally issued to income recipients if at least $600 in income has been received.

However, the income must be reported, even if you don't receive the 1099-MISC.

Following Irene2805's advice from this page, you'll enter this income using the following steps:

1. Click on Federal > Wages & Income   
2. In the Less Common Income section, click on the Start/Update box next to Miscellaneous Income, 1099-A, 1099-C
3. On the Miscellaneous Income screen, click on the Start/Revisit box next to Other reportable income. 
4. On the Any Other Taxable Income? screen, click the Yes box.
5. Enter the income on the Other Taxable Income screen, along with a description.  Click Continue.
6. You will be brought to the Other Miscellaneous Income Summary.  If you have no more miscellaneous income to report, click Done.

[vdots]

Thank you so much for clarifying this! A related question I have is: my utility company cuts me a check annually for any excess energy I generated during the preceding 12 months. I assume that will also be considered miscellaneous taxable income?

[WendyN2]

Yes, it would be considered Miscellaneous Income - you would report this under the "Miscellaneous Income" section and go through the questionnaire step by step to ensure that the system does not "think" this money should be allocated to a Schedule C. 

[vdots · Accepted solution]

Thank you so much for a prompt response!

[BCinDC]

Hi there - bringing this old thread back to life with a new question about SRECs.  I received $1,600 in SRECs this year, which I will claim on my taxes (though I have not yet received a 1099 yet from the company that purchased them).   However, I also had $1,495 worth of repairs to my system in January (I had to replace my inverter), so my net income after repair costs was only $105.

Can I deduct the repair costs from the income?  And if so, how do I do this?  Do I just claim $105 as Miscellaneous Inocme somewhere?  Or is there a different way to show it? 

[PatriciaV]

@BCinDC 

No, repairs to major components of your home are not tax-deductible. The cost to maintain your solar energy system cannot be used to offset the income you received from Solar Renewable Energy Credits. Please see the post in this discussion from JohnW152 for instructions on how to report your SREC income.

[greatgoogly]

In the 2022 Turbo Tax the field suggested in the solution now says specifically NOT to enter information from 1099-MISC here. 

[AbrahamT]

Right, your'e talking about this screen

Here's what you do

1- On the right, in the magnifyig glass type in 1099misc

2- After that, you'll see a link Jump to 1099 misc

3- then this screen will pop up

click yes on the bottom right hand corner. That's where you enter it.

[bm46]

Aren't some repairs to home deductible where a person is taking a dediction for home office deduction.  Also, isn't a portion of roof repair deductible as rental expense, where roof is for an up and down unit duplex, where one unit is residence of taxpayer in question?  I realize neither of these two situations specifically aligns with the situation involving energy credit sale.  However, is there reason to only limit repairs to one's home to these two situations, as partially deductible?  Also, what would be considered "major repairs"?

[AbrahamT]

So here's the deal with the home office deduction. If it is deals with  cosmetic changes or changing the flooring or painting, then you may simply take it and expense it as it relates to the home office exclusively, not to the actual house itself. . However, if it deals with major repairs like a roof repair which brings your roof to back to a  state of suitable for a proper roof, then that would be considered a capital improvement subject to a depreciation life of 27.5 years adjusted for the rental portion. You also have the option of adding it to the cost basis of your home and deperciating  it over the remaining life of your home. A third option would be to take a Section 179 depreciation in which case you can fully expense the entire cost of the roof repair. 

[LaurieHur]

My solar company doesn't give me a 1099-MISC for my SREC credits, but I can pull the information up on their web site.  Do I report the total sales or the net sales, which is total sales minus fees?  

[PattiF]

You would only report the net sales.

Follow these steps in TurboTax Online:

• In the Federal section, under Your income and expenses
• Scroll to Other Common Income
• Select Form 1099-MISC
• Follow the Prompts and enter amount in Box 3, Continue
•  Describe the reason for this 1099-MISC box
• Do any of these uncommon situations apply? check last box
• Select No, it didn't involve work like my main job on Did the SREC involve work that's like your main job?
• Answer How often did you get income...Although you may receive this income every year, say that you only receive the 1099-MISC only in 2022, not in previous years and not in 2023, you will then have the screen where you can say that it did not involve an intent to earn money.
• Select No on Did the SREC involve an intent to earn money?

[LaurieHur]

Thanks!

[fp7]

Are SREC payments taxable income if your solar system hasn't generated a profit yet? In other words, I have spent more money on my solar panels than I have earned back in savings on my electric bill, SREC payments, and the federal tax credit. Should I still declare my SREC payments as income on my federal tax returns?