Solar panels

[briandsmith]

I do the taxes for my daughter. She has invested in solar panels. She is eligible for the Residential Energy tax credit but her solar company is advising that she claim the Investment tax credit instead. This so she can claim depreciation by using part of her home as a business. The "for profit" part would be the energy she "sells" to the utility.

Is this the way you would advise and is she liable for tax on what she "sells? How does the IRS know?

[DawnC]

Can't say that I would advise that; the solar company sells solar panels; they are not tax people;)   Does she already run a business from her home and file business tax returns?   She can only depreciate the portion of her home used in business, and that requires filing business tax returns.  

US Department of Energy information for each is below.   

Homeowner information on the Solar Credit - this credit reduces her tax liability and any unused portion can be carried over to future years until it is exhausted.  

Business information on the Solar Credit - - there are 2 credits for businesses; the investment credit works just like the solar credit for homeowners (see article above).  

[briandsmith]

Thank you for the reply. I will spend some time with the second article you attached.

She has no business from her home, other than selling the extra power she generates to the utility company.