When and How to Claim Green Energy Tax Credits
In our latest nonprofit blog we discussed the “who and what” regarding nonprofit and other non-taxpaying entities eligible for the direct pay refund election for green energy tax credits available as of 2023 by the Inflation Reduction Act. The Inflation Reduction Act is a game changer for investing in clean energy, offering new tax incentives and financing opportunities.
Now we will address the “when and how” to claim the credits.
When to claim the green energy tax credits
Timeliness is very important. The green energy tax credits can only be made on a timely filed original tax return (including extensions.) These tax credits will be available starting for tax year 2023. You cannot file an amended return to obtain the credits. So be sure to file timely and if you do file an extension, be sure to file a valid extension. The original filing due date is generally the 15th day of the 5th month. These energy tax credits are very valuable, and filers will want to take extra care with due dates.
How to claim the credits
How to claim the tax credits has been a question since the Inflation Reduction Act passed last August. The IRS has now issued proposed guidance confirming elections for direct pay green energy credit refunds will be made on Form 990-T. Even if there is no unrelated business taxable income, the annual tax return will need to be filed, along with an attached Form 3800 – General Business Credit, to claim the tax refund.
There will also be a pre-filing registration process that the IRS is now creating. The registration will need to be completed prior to claiming the credit on the tax filing. This IRS guidance for the registration process is expected to be issued later in the year.
How we can help
For more information, read CLA’s article – Inflation Reduction Act Credit Monetization Programs Take Shape : 2023 : Articles : Resources : CLA (CliftonLarsonAllen) (claconnect.com)
Please register and join us for CLA’s webinar – https://www.claconnect.com/en/events/2023/unlocking-green-energy-tax-credits-from-the-inflation-reduction-act
Contact us and CLA’s energy incentives team can help your organization navigate the available tax credits.
Laura enjoys providing tax services for public charities, higher education institutions, private schools, cultural institutions, associations, foundations and healthcare organizations.
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