To claim the federal 25D battery storage tax credit, follow these steps:
Check Eligibility
- Location and Ownership: Ensure your home is located in the United States and that you own the residence.
- Battery Storage Requirements: The battery must have a capacity of at least 3 kilowatt-hours to qualify.
- Year of Installation: You can claim the credit for installations made from 2023 onwards.
Purchase and Install the Energy Property
- Buy and install new, qualified battery storage technology for your home.
- Ensure that the property is installed, not just purchased. The credit applies to the tax year when the property is put in service.
Document Expenses
- Keep records of all expenses, including receipts and invoices, for the purchase, preparation, assembly, and installation of the battery storage system. These documents may be required if your tax return is audited.
File Form 5695
- Use Form 5695, Residential Energy Credits, to claim the credit when filing your federal tax return for the year the property was installed.
- The Residential Clean Energy Credit is typically 30% of the qualified expenses from 2022 to 2032, decreasing gradually afterward.
Understanding the Credit
- The credit is nonrefundable, meaning it cannot exceed the amount you owe in taxes. Any excess credit can be carried forward to future years.
- Subtract any subsidies or rebates received from the qualified expenses when calculating the credit.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-can-i-claim-the-federal-25d-battery-storage-tax-credit/
