Green Energy Tax Credits for 2017

With a changing political landscape, some clients of ours have been wondering whether certain renewable energy tax breaks were still available. Some of these tax breaks expired at the end of 2016 and were not renewed. Others are still active. This page will give you the run down on changes to “green” energy tax breaks.

Residential Solar Energy Credit

This is an image of a house with a solar panel roof. The Earth is reflected in the solar panel.

This is one of the largest “green energy” tax credits currently available, and it’s still on the table in 2017. There’s never been a better time to go solar. Homeowners can claim a federal income tax credit equal to 30% of the cost of purchasing and installing solar equipment. This equipment can be costly, so this tax credit could mean big bucks for homeowners hoping to convert to a renewable energy system.

Though there are no income limits for this credit (a billionaire could claim it), there are some exceptions. This credit can be claimed on vacation properties, but this credit cannot be claimed on rental properties. Also, this credit cannot be claimed on solar heating equipment that heats a swimming pool or hot tub.

The credit is claimed by including Form 5695 with the client’s Form 1040. Clients should keep proof of how much is spent and records of when the work was completed. The credit can only be claimed on the year in which the system was installed.

Changes to the 30% Credit Opportunity

In 2016 clients could claim this credit for installing wind energy systems, geothermal systems, and fuel cells. In 2017 the credit is limited to solar energy systems.

Credit for Plug-in Vehicles

A tax credit worth up to $7500 is available in 2017. This credit is available for purchasing new (not used) electric vehicles that draw energy from an external source, hence plug-in. The credit can be claimed on four-wheeled street vehicles (not farm equipment or semi trucks).

The credit starts a $2500 for a vehicle powered by a four kilowatt-hour battery. Another $417 is available for every additional kilowatt-hour of battery capacity beyond four. The max for this credit is $7500.

There are no income limits for this credit. It can be claimed by including Form 8936 with the client’s return.

Summary

The renewable energy tax credit of 2016 has been reduced to a solar energy tax credit. The credit for plug-in vehicles is still available.

Contact us today with any additional questions or comments!

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When Is it Safe to Throw Away Old Tax Returns and Receipts?

Who doesn’t like clearing clutter from their life? It is a very satisfying feeling, but it’s even nicer when it’s not tinged with concern. Many of our clients ask us when it’s safe to discard old tax documents. The answer depends on the document type.

This chart should provide some clarity for those seeking to purge paperwork.


Old Returns
Six Years*

Documentation of IRAs or 401(k)s
Three Years After the Account Balance is Swept

Payroll Tax Records**
Four Years

Documentation of IRAs or 401(k)s
Three Years After the Account Balance is Swept

Health Coverage Documentation for Employees
Three Years

Real Estate Records
Three Years After You Sell the Property

Documentation on Costs if Assets and Depreciation
Do Not Discard

*It’s a good habit to keep your old returns for six years. Though the IRS will generally only question your last three years of your returns, there are conditions under which they can go back six years. Prepare for the worst and keep six years of old returns.

**This includes wage amounts, payments dates, and employee information

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Talk of the Social Security wage base to increase to $126,000 for 2017

According to CCH online:

The Social Security Administration’s Office of the Chief Actuary (OCA) has projected, under two out of three of its methods of forecasting, that the Social Security wage base will increase from $118,500 for 2016 to $126,000 for 2017.

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Fact Sheet from the US Department of Labor on Overtime Pay

Have you heard of the new law that has been passed by President Obama regarding overtime pay?  This new salary requirement is put into place and effective December 1, 2016!

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Deductions for Heavy Trucks and Vans

Are some of you considering purchasing a new vehicle this year for a business deduction? Did you know that there are some unfavorable depreciation rules that may apply?

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Taxpayers Urged to Use IRS Direct Pay Option

Federal Tax Day – Current,I.1,Taxpayers Urged to Use IRS Direct Pay Option,(Feb. 23, 2015)
Taxpayers can use the free, secure service to pay their individual tax bill or estimated tax payment directly from their checking or savings accounts.

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New Tax Deadlines for Partnerships and Corporations!

The federal highway funding extension bill passed by Congress with a big change to the Partnership and Corporation deadlines.  There were also changes made to mortgage interest statements, basis of inherited assets, and the six-year statue of limitations.

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Consider the new IRS Direct Pay

The IRS released an article this year stating that their new web-based system called the IRS Direct Pay has had great success!

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Treasury and IRS Annouce Recognition for All Same-Sex Marriages

Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes

Check out the new IRS update on same sex marriage recognition for tax purposes!  What a great movement in our country.

If you or anyone you know would like to take action and amend any prior year’s tax return please call our office today! 815-477-8000 We’re happy to help!

Kindest Regards,

Miller Verchota, Inc.

Certified Public Accountants

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Children in Summer Camp? Remember this Qualifies for a Dependent Care Credit!

If you have a child or children who are under the age of 13 and they are participating in summer-camp remember to save the total cost for this write-off!

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