Which year should I claim solar energy credits for payments spanning two years?

[piqueF]

I have had solar panels installed on my main (only) home. I paid 10% when the project started in 2022, then 80% in January 2023. The remaining 10% balance will come due in March 2023. Should I claim the 10% for tax year 2022 and the 90% balance for 2023? I thought I read that you can only claim once for a single solar energy project -- if correct, then should I claim the 100% for 2022 or for 2023?

[JulieS]

Yes, you claim your solar energy project just once, when the system is installed. 

For purposes of energy credits, costs are treated as being paid when the original installation of the item is completed. It sounds like you should claim the entire amount in 2022, even if you haven't finished paying for it. Click here for IRS guidance. 

[piqueF]

Thanks for the reply. However, while I paid 10% in 2022, the installation did not start and was not completed until March 2023. Therefore, doesn’t that mean I should not claim it until I do my 2023 taxes (in 2024)?

[HelenC12 · Accepted solution]

Yes, you're right. Since the installation was not completed until March 2023, claim the credit on your 2023 income tax return that you'll prepare in 2024. 

Per IRS: Under Who can take the credits: For purposes of the residential energy credit, costs are treated as being paid when the original installation of the item is completed.

Additional information: Where do I enter qualified energy-saving improvements?