Energy Tax Credits

Steve Perry

Published on: 04/06/2025

The **Inflation Reduction Act of 2022** has revived valuable **home energy tax credits** for homeowners who make qualifying energy-efficient improvements. Two key credits are available: the **Energy Efficient Home Improvement Credit** and the **Residential Clean Energy Credit**. These apply primarily to a homeowner’s **main residence** and can vary if the home is partially used for business. For example, if a home office comprises more than 20% of the space, only the non-business portion qualifies for the credit. The **Energy Efficient Home Improvement Credit** covers upgrades like insulation, energy-efficient doors, windows, HVAC systems, and home energy audits. For 2022, the credit is 30% of qualifying costs, capped at **\$500 lifetime**. From 2023 through 2032, the credit remains 30% but allows up to **\$1,200 per year**, with **no lifetime limit**. Biomass systems have a separate **\$2,000 annual limit**. The **Residential Clean Energy Credit** includes solar panels, wind turbines, geothermal systems, and battery storage (from 2023). The credit is also 30%, but **only for new systems**. These credits are **nonrefundable** and cannot be carried over, making careful tax planning essential. With varying qualifications and interaction with rebates or state incentives, these credits are best calculated by a knowledgeable professional like **Steve Perry at Books, Taxes & More**.

Tax education articles and IRS representation advice for individuals and small businesses

Tax Treatment for Family Members Working in the Family Business

Steve Perry

Published on: 03/06/2025

Hiring family members in a business can offer benefits such as lower labor costs and trusted help, but it comes with specific tax implications that business owners must understand. One key area is when spouses co-own a business. If both spouses materially participate and file jointly, they can elect to be a **qualified joint venture** instead of a partnership, allowing them to avoid filing IRS Form 1065. Instead, each spouse files a separate Schedule C, and no EIN is required unless needed for employment taxes. However, the business cannot be a state-recognized entity like an LLC or limited partnership. If a spouse is treated as an employee, normal payroll taxes apply, except for **FUTA**, which does not apply to spouses. Similarly, when children under 18 work for a parent’s sole proprietorship or partnership where both partners are parents, they are exempt from **FICA and Medicare taxes**, and under 21, exempt from **FUTA**. These exemptions disappear if the business is a corporation or includes non-parent partners. This area of tax law is complex and nuanced. Mistakes can lead to penalties or missed opportunities. For personalized guidance, consult Steve Perry, EA at Books, Taxes & More, who can help you navigate these rules with confidence and clarity.

Tax education articles and IRS representation advice for individuals and small businesses

Understanding IRS Notice CP2000: What It Means and How an Enrolled Agent Can Help

Steve Perry

Published on: 03/06/2025

The IRS Notice CP2000, generated by the Automated Under Reporter program, indicates discrepancies between reported income and third-party data. It includes proposed tax adjustments and requires a response. Taxpayers can agree, disagree, or partially agree with changes using an Enrolled Agent for assistance. Prompt, accurate responses are crucial.

Tax education articles and IRS representation advice for individuals and small businesses

What to Expect During an IRS Audit: A Step-by-Step Guide

Steve Perry

Published on: 02/06/2025

Worried about an IRS audit? Follow this step-by-step guide and learn how an Enrolled Agent from Books, Taxes & More can protect your rights and reduce stress.

Tax education articles and IRS representation advice for individuals and small businesses