A1A Solar explains the investment tax credit
It’s tax season, which always brings a lot of questions about claiming solar on taxes. Remember, we’re solar people, not tax people, so it’s always best to consult a tax professional before filing your tax credit.
Here’s an overview of what the solar tax credit is and how to file for it:
What is the ITC?
The investment tax credit (ITC) is a 30-percent tax credit for solar-powered systems on residential and commercial properties.
Approved credits
According to TurboTax, “Installing alternative energy equipment in your home can qualify you for a credit equal to 30 percent of your total cost. The credit is available through the end of 2019. After that, the percentage steps down each year and then stops at the end of 2021.” The equipment that qualifies for a tax credit includes solar-powered units that generate electricity or heat water.
Requirements
You must own your solar-powered system rather than lease it. You’re also eligible to claim the solar tax credit even if the solar energy system is not on your primary residence – as long as you own the property and live in it for part of the year.
Filing steps
- First, determine if you are eligible for the federal ITC.
- Complete IRS Form 5965 to validate your qualification for renewable energy credits.
- Add your renewable energy credit information to your typical Form 1040.
With current solar incentives, the initial solar investment cost is drastically reduced, accelerating return on investment and payback scenarios. These generous local/state rebates and federal tax credits make it an easier decision to invest in solar.
