Level 2

1099-NEC for SREC income

Forum|Forum|3 years ago
February 14, 2023
2 replies
11 views

My client purchased and installed residential solar panels for his home in 2021 and received the tax credit. In 2022 he is now receiving a 1099-NEC for over $15k for supposed unused energy generated from his system that was sent back into the grid. From some articles I read i sounds like this is legitimate taxable income but because it was reported on 1099-NEC I am being forced to report it as Sch C income so he is getting dinged for the self employment taxes also. Can this be correct? Shouldn't it be 'other income' instead? 1099-NEC is forcing me to enter on Sch C or Sch F.

This topic has been closed for replies.

T

TaxGuyBill

Level 15

First, you need to figure out what the income is for. In your title, you said SREC, but then you mentioned selling energy back to the grid. Those are two completely different things.

$15,000 of electric production for selling back to the grid? I would think that would require much more than just panels installed on a home roof, unless there were MANY installed on the ground in a large field.

IRonMaN

Level 15

Bill - here is the client's yard:

Slava Ukraini!

T

TaxGuyBill

Level 15

That would be awesome!

BobKamman

Level 15

This PLR might help:

https://www.irs.gov/pub/irs-wd/1035003.pdf

Maybe this is a one-time payment, for all the REC's that the system will generate over the years? (And I don't think they have to involve anything going into the grid.) Other references indicate that the 1099-MISC was used in previous years. Did he actually receive $15K? When? Does he expect to receive more in future years?

I would first ask the utility why they decided to use the -NEC and not the -MISC or even the -S.

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