Plan for Next Year’s Taxes Now!May 22, 2019
Tax season has just recently passed and most of us are ready to forget all about the tedious process until this time next year when we need to file all over again.
Unfortunately, many tax filers are left with the feeling that they missed the boat when it comes to taking full advantage of tax incentives for solar energy systems. We hear from many homeowners who schedule an installation immediately after submitting their taxes because they realize that they need to lower their bills, all while receiving federal, state, or local incentives to do so.
If you have been contemplating going solar, now is the time to take advantage of incentives and tax breaks before they are reduced. The U.S. federal solar investment tax credit is set to decrease after 2019.
What is the Solar Tax Credit?
The federal solar tax credit, also known as the investment tax credit (ITC), allows you to deduct 30% of the cost of installing a solar energy system from your federal taxes. The ITC applies to both residential and commercial systems, and there is no cap on its value.
Originally the ITC was established by the Energy Policy Act 2005. A series of extensions pushed the expiration date back to the end of 2016, but experts believed that an additional five-year extension would bring the solar industry to its full maturity. This year, 2019, is the last year that the credit will remain at 30%.
In 2020, the credit for both residential and commercial customers will be reduced to 26%. Then reduced again in 2021 to 22% and then 10% from 2022 onward. The sooner you act the sooner you can take advantage of this offer. Don’t let another year slip by without at least exploring if your home or business is a good candidate for solar.
How Do I Qualify for Solar Tax Credits?
To qualify for the federal ITC, there are several requirements that must be met. First, the system must have at least commenced construction installation. You must own your own home or business. Renters are not eligible. You must also own the solar panels. Leasing does not qualify you for this tax credit. Finally, you must pay enough in taxes under the federal government to qualify.
When filling out your taxes, IRS Form 5695 must be completed and add your renewable energy credit information to your regular 1040 forms.
Are you ready to take advantage of the tax credits for solar energy all while helping the environment by reducing your personal carbon footprint? If you need help or have questions about your qualifications for the tax credits or where you fit into the picture, then contact BlueSel today at 781-281-8130, or visit our website.