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Spaniards hot under the collar after government taxes the sun

Spain Tourism sun logo_TURESPANAOne of my favorite T-shirts was the one the hubby brought back from Spain when he went there in 1997 to cover the Ryder Cup golf tournament.

On the shirt's front was Spain's tourism logo, a colorful, stylized sun.

I wore out that shirt and now it looks like the sun -- or at least those who use it for energy -- has worn out its welcome in España.

Technically, Spaniards can still use the solar panels they installed to power their homes with the same resource that attracts millions of tourists. They just have to pay more for it.

A lot more.

Spaniards who invested in solar panels but did not or do not connect them to the electric grid will face fines, or a so-called sun tax, ranging from 6 million to as much as 30 million Euros, or $8 million to $40 million U.S.

That top transatlantic tax amount is this week's By the Numbers figure.

In addition, the new law prohibits Spanish homeowners from selling electricity they do not need back to the grid.

So what caused Spain's retaliation against Sol, a resource it still highlights in its tourism brochure via a photo of a welcoming field of solar dependent sunflowers?

Spanish sunflowers from national tourism office brochure

Sunflower photo courtesy Spanish Tourism office.

The new levy is needed, contend Spanish officials, because grid-connected consumers that can produce their own electricity also benefit from the back-up provided by the power system. The levy will help control growth in rooftop solar, so the thinking goes, minimizing its impact on the system.

Plus, argues the government, Spain already has too much power generation, with total capacity exceeding peak demand by more than 60 percent.

And, oh yeah, there's the money. The Spanish government is in debt to its power producers to the tune of 26 billion Euros, or almost $35 billion U.S. The new sun tax should help repay that bill.

Challenges by sun-loving Spaniards: Some homeowners, however, aren't going to be part of the debt payoff. They are taking down their solar panels rather than face the new tax.

Others plan to ignore the government's decree that the reconnect their panels to the grid, reports Reuters, confident the courts won't uphold the huge fines.

They note that the fee amounts were created by a 1997 energy law that, while possibly appropriate for a large corporation, could never be paid by private individuals.

"If I spend 600 euros to install solar panels and get fined 6 million euros, let the judge decide," said Sergio Pomar, chief executive of energy-efficient installation firm INEL, told the news service.

Teresa Ribera, senior adviser to the Paris-based Institute for Sustainable Development and International Relations (IDDRI), said the law could provoke additional civil disobedience.

"This law is illogical in terms of energy efficiency and costs ... and is a serious invitation by the government for citizens to become anti-system," she told Reuters.

Solar gets U.S. support: In the United States, going solar is still viewed as a favored alternative energy system.

The Obama Administration is reinstalling solar panels on the White House. For those with short memories, it's not the first time alternative energy has been used at the White House.

In 1979, President Jimmy Carter had 32 solar panels placed on the roof of the first family’s residence amid the Arab oil embargo,

President Ronald Reagan had them removed in 1986.

Solar returned to the grounds of the White House, however, under President George W. Bush in 2003. Bush 43 used a solar system on a maintenance building to help heat the White House swimming pool.

There's no word yet just how many panels will be installed or the expected energy output. However, President Obama is doing his part to meet his pledge that 20 percent of the federal government's energy use will be powered by renewables by 2020.

Individual tax breaks for solar systems: If individual American homeowners want to go solar, they can get some tax help funding the effort.

The residential energy efficient property tax credit for installing alternative energy systems, including solar systems, could net eligible U.S. homeowners a substantial tax credit, which is a better tax break because it lowers a tax bill dollar-for-dollar.

Because these systems typically cost a lot, there's no cap on the credit amount. You can claim 30 percent of your costs, including labor, to transfer your home to a more environmentally friendly and energy efficient operation.

The credit is not refundable, meaning that if you have any excess from your new solar powered system's cost, you can't use it to wipe out your tax bill and then get a refund for the rest. But you can carry the excess forward to help lower or erase future tax year bills.

The credit is available for upgrades that are in place by the end of 2016.

The Energy Star website has details on the solar and other large-scale alternative energy system tax credits, as well as on the smaller tax break (a $500 maximum credit) for less comprehensive energy efficiency improvements that are completed by the end of 2013.

You also might find these items of interest:


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  • OK, some about Kay
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    Kay Bell — Native Texan
    (the blog title totally makes sense now, right?). Professional journalist. Tax geek.
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    Tick ... Tick ... Tick

    • It's the final
      2023 tax countdown!

      It's over! We cleared 2023's extended filing deadline, unless you get more time because your filing was affected by a major natural disaster, military service, or some other Internal Revenue Service recognized special situation. If that's you, be sure to check out all the ol' blog's earlier Tax Tips, listed by month just under the old-school No. 2 yellow pencil tip atop this column.

      For most of us, though, the passage of Oct. 16 means it's time to focus on the Form 1040 that we'll file next year. In most cases, we have until Dec. 31 to make moves that will reduce our still accruing 2023 tax bill.

      The countdown clock below should help us from missing out on making important tax-saving moves the rest of this year. Plus, the Tax Moves below the counter will list some timely tasks to take care of in each of these final 2½ months of 2023.
      Note: I'm in the Central Time Zone, so adjust accordingly for where you live.

    Time for Tax Tasks

    • monthly tax moves

    • Ho 🎅 Ho 🎅 Ho!
      December is here!

      You better watch out. You better not cry. But you better make some year-end tax moves this December or next April 15 could turn out to be the tax equivalent of Santa Claus putting coal in your stocking.

      Santa Claus is watching YOU!
      Click image to hear a musical Santa message from Bruce Springsteen.

      St. Nick can't deliver a festively wrapped, already prepared tax return for you (unless he's even more magical than I think!) to file next year, but he does have a tax connection. Santa's tracking of naughty and nice boys and girls basically is the same method that the Internal Revenue Service uses. That's why we all need to be nice, especially to ourselves, in this final month of the year by making some important tax-saving moves. Let's get to it!

    • Dec. 1: This last filing season was more-or-less back to pre-COVID-19 pandemic normal, but if your own personal filing circumstances remained a mess, it's time to act. Maybe you realized you need professional tax help. If so, now is the time to find a tax preparer who can help ensure your return filing next year goes more smoothly. You have lots of options.There's also a December bonus. If you hire a tax pro this month, you might get some year-end tax tips!

      Dec. 4: Are you taking on a variety of gig work to make some extra holiday cash? Those added jobs mean you're an independent contractor. And that means you're responsible for paying income taxes due on the money, as well as any self-employment tax. Now is the time to start gathering those records and tallying this taxable income so you're not surprised at filing time.

      Dec. 11: If your job, over the holidays or full-time, is as a server at a restaurant or at any other establishment where gratuities from customers are part of your compensation, I hope you get extra seasonal financial thanks this month for doing your job well. Remember, though, that those tips are taxable income

      restaurant check tip iStock
      Whether you're dining at your favorite eatery, or during the coronavirus pandemic discovered you really like getting food delivered to your home, if a tip isn't included on your restaurant or delivery bill, click the image above to calculate how much to tip the person who brought it to you.

      And if you got at least $20 in gratuities in November for your extraordinary services as a food server or hair stylist or parking valet or whatever job where tipping is common, you must report that amount by today. Use Form 4070 to let your employer know the total tips you took in last month.

      Dec. 15: Christmas is just 10 days away! If you're still shopping for gifts, you're probably searching for the perfect present online. But beware and be wary. Internet crooks also are logged on, looking to steal your money and identity, using many of the techniques they employ in tax scams. Any personal information they get now can be used at tax time to file a fake return in your name and claim a fraudulent refund. So be careful out there, now and next filing season, and, well, unfortunately all the time.

      Dec. 18: Many of us are trying to concentrate this final work week before Christmas. As far as taxes go, it's a good time to revisit your estimated tax situation, especially if you got some money from those previously mentioned gigs. Since these amounts typically aren't subject to withholding, you'll need account for the December earnings in your January 2024 final 1040-ES amount for 2023.
      Better to know that amount now, than on Jan. 16's due date.

      Dec. 22: It's Christmas Weekend! That means holiday treats, final decorations — or first, if you wait until the very end to get a tree — and frantic last-minute shopping! Rather than worry about how you'll get the perfect gift under the tree on time, consider instead some easy tax-favored gifts. Open a Roth IRA for your child or grandchild who earned some money this year. Or pay tuition for classes that will start in the first quarter of 2024 by Dec. 31. Those college costs then can be used to claim the American Opportunity Tax Credit.

      Dec. 24: Christmas Eve!
      No taxes tonight. It's early to bed for kiddies of all ages. Santa's on his way!

      Santa Claus is on his way!
      Click image to watch
      Santa's delivery route as tracked by NORAD.

      Dec. 25: Merry Christmas! My gift to you is another day without tax thoughts.
      Just enjoy the holiday and your family and friends.

      Dec. 26: Happy Boxing Day. This unofficial holiday on St. Stephen's Day is celebrated by additional giving.
      If you donate to your favorite charity on this Boxing Day or any other day by Dec. 31, on your 2023 taxes you'll have to itemize your gifts on Schedule A to claim them. The option to claim a limited amount directly on your Form 1040 expired at the end of 2021. What didn't expire is the IRS' tax donation deduction rules.

      Dec. 31: This is it. The drop-dead deadline to make most 2022 tax moves. A quick and easy action today is to zero out your medical flexible spending account (FSA) by buying over-the-counter medications for which the funds can be used. This is especially important if your employer doesn't offer a grace period to use the money or let you roll it over into 2024. Without those alternatives, you'll lose any FSA funds you don't use.

      Done? Great! Make sure the champagne is chilling and settle in for your New Year's Eve party or a cozy night at home with your friends and loved ones. Either way, cheers and Auld Lang Syne as the ball drops at midnight.

      Small Business Tax Calendar: Important filing, deposit and record keeping dates throughout the year that your company needs to know. You can get more tax calendar information at the IRS' online calendar page and view the full year's important business and individual tax dates in IRS Pub. 509.

    State Tax Help

    • Don't forget your state taxes!
      Forty-three states and D.C. collect personal income taxes. But even if you live in of the seven states without an income levy, you still face other state (and local) taxes.

      State Tax Departments provides links to your state's Web page. The companion page, Tax Tidbits, is the compilation of blurbs about each state's tax laws. And for more state tax news, check out all our state tax bloggings.

    Tax Forms

    • Tax Forms
      Thanks to our increased use of tax preparers and computer software, many of us don't see our tax forms until we sign and file them. But knowing what's on these documents, either in paper or digital form, and why the IRS wants it is key to understanding our tax system. And knowledge definitely is power, especially when it comes to tax savings. Find this valuable information in the ol' blog's special Tax Forms 2023 page.

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    • While it's easy to rail at the IRS, for the most part we can thank — or blame — our tax laws on Congress and the White House. So if you have an issue with tax legislation or want a tax bill passed, you need to let your federal legislators and the White House occupant know of your concerns. You can find out who in Washington, D.C., to contact (and how), as well as get information on your local lawmakers for matters, tax or otherwise, closer to home, at USA Gov.