Red Shoulder Hawk

Red Shoulder Hawk

Tuesday, January 06, 2009

Using the Tax Credit for Renewables

Here's a tidbit of information that could make a difference of a couple of hundred dollars or more, courtesy of the best solar installers in the Bay Area.* When should you apply your 30% tax credit? Before, or after you subtract your rebate from the full price of your system?

The options:

"Rebate First:" subtract the rebate first, then take 30% ITC on the difference.

"ITC First:" take the 30% ITC on the full purchase price, subtract the rebate, and treat the rebate as ordinary income, paying federal and state taxes on it.

Which is better? If my client's marginal tax rate is less than 30%, I'll ask them to consider "Rebate First." If it is greater than 30% they should consider "ITC First."

*Yes, I know our website is terrible. I'm working on it. Buy solar power from us so I can work on it faster. Thank you.

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