The Residential Energy Tax Credit: Understanding the Small Wind Energy Tax Credit

🌬️The small wind energy tax credit is part of the residential energy tax credit under form 56.95.

🔌To qualify for the credit, the small wind energy property must be connected to a residential dwelling unit and used as a residence.

💰The credit amount for the small wind energy tax credit is 30% of the qualified property expenditures.

📅The small wind energy tax credit is available for the 2022 tax year and is extended until 2032 with a gradual reduction in the credit amount.

💡Labor costs for installing the small wind energy property can be included in the credit calculation.

Can I claim the small wind energy tax credit for a second home?

—Yes, as long as the second home is a residence, you can install the small wind energy property and claim the credit.

Are there any limitations on the small wind energy tax credit?

—The credit is subject to a limitation based on tax liability. If the credit exceeds the tax liability, it can be carried forward to future years.

What happens if I don't have enough tax liability to fully use the credit?

—If the credit exceeds your tax liability, you won't receive a refund for the remaining amount. The excess credit will be carried forward to future years.

Is the small wind energy tax credit available after 2034?

—As of now, the small wind energy tax credit is not available after 2034. However, there may be legislation to extend it in the future.

Can I include labor costs in the small wind energy tax credit?

—Yes, labor costs for installing the wind turbine can be included in the qualified property expenditures used to calculate the credit.

00:01Introduction to the small wind energy tax credit under form 56.95 for the 2022 tax year.

00:36Explanation of the eligibility criteria for the small wind energy tax credit, including the requirement for the property to be connected to a residential dwelling unit.

01:26Overview of the credit amount and its extension until 2032, with a gradual reduction in the credit amount from 2033 onwards.

03:36Discussion of labor costs, limitations, and how the credit is calculated based on tax liability.

06:32Explanation of the tax return and example fact pattern, showcasing how the credit is applied to offset tax liability.