A Solar Tax Credit In Murrieta!
The solar tax credit is a credit that both home and business owners can claim on their tax returns. The solar tax credit is calculated as 30 percent from the net system price. To make these incentives even more attractive, the federal solar tax credit is a dollar for dollar reduction in your taxes owed.
The federal solar tax credit is by far the most lucrative financial incentive for making the switch to photovoltaic power. Eligibility for the solar tax credit is fairly simple, although there are a few things to look out for. The solar tax credit can be claimed for the tax year that the system is installed and approved to operate.
Solar Tax Credit is one of the most flexible of its kind in the country you can roll over excess credits for up to five years.
It’s no secret that leaders in energy production are working hard to ensure the viability of renewable energy sources. A large factor in determining renewable energy viability is the economics of it. Only when renewable energy becomes economically viable will it be able to supply larger quantities of clean energy on a greater scale.
Though many residences, businesses and public buildings have adopted solar energy, it still only accounts for less than 1% of energy consumption in the United States and just above 1% globally. European countries like Germany, Italy and Greece have approximately 7% of their energy supplied by solar. But the solar industry has its sights set on far greater adoption rates that are required to grow the industry and help achieve energy independence.
The current paradox facing the solar energy industry is that higher solar installation rates depend on affordability, and affordability depends on higher solar installation rates. So how do solar energy providers and advocates increase solar installation and usage rates if consumers still perceive the initial costs as being too high? The answer is in financial incentives. Read more here.
The thing about the solar tax credit is it isn’t fully refundable, meaning you can only take a credit for what you would have owed in taxes.
What’s a Tax Credit?
A tax credit is not a tax deduction. With a tax deduction, you deduct some amount off your gross income to determine your taxable base income. A tax credit is much better. It can be used to pay off your owed federal taxes. So, it’s sort of like receiving an IRS gift card.
Who is Eligible to Receive the ITC?
Any U.S. tax payer who purchases a solar or other renewable energy system is eligible to receive the 30% solar ITC. However, if you installed your solar system with a solar lease or a solar PPA, then you’re not eligible, since the leasing company owns your solar system, so they will receive the ITC. But most leasing companies take the value of the 30% ITC into consideration when calculating your lease rate, so you do benefit indirectly.
How Do You Calculate the 30% Solar ITC?
Calculating the 30% ITC differs for homeowners and commercial businesses. Homeowners calculate the 30% on the net installed cost; i.e., after you’ve deducted the value of any state or utility rebates.For example, say the total cost for your solar installation was $15,000 and you received a utility or state rebate of $3,000, your total upfront expense is now $12,000. Consequently, to calculate the 30% ITC:
30% x $12,000 = $3600 tax credit that you can use to pay your taxes to the IRS. See more here.
Solar Tax Credit is that you can claim the credit regardless of whether you purchase your system (with cash or with a solar loan), or you go solar with a solar lease or PPA.
It’s that time of year again—tax time! But this year is different, because this was the year you installed solar panels on your home (or qualifying property), and now you’re ready to get that big fat tax credit to take 30% right off the top of that expense. And we’re here to help guide you through the process!
And hey—if you’re reading this and haven’t yet installed solar, you only have a couple more years to get this sweet tax credit. 30% off the cost of a system is nothing to scoff at people, but the tax credit won’t be that big after the end of 2019… so what are you waiting for? Sign up to get personalized solar quotes from our expert partner installers.
We’ve included an example below of how to fill out the tax forms, and we’ve also included a section at the bottom of this post that answers some frequently asked questions about the process of claiming the credit.
- The receipts for your solar installation
- IRS Form 1040 for 2016
- IRS Form 5695 for 2016
- Instructions for both those forms
- A pencil. Check full article here.
Claiming The Solar Tax Credit Is Very Simple
Figure out what solar tax credit is and how you can be benefitted through the same. A solar tax credit is a deduction on your federal and state income taxes for the year in which you install a solar system, including solar panels and solar water heaters. The federal solar tax credit can be rolled over for up to 5 years which means you really only need one-fifth of the tax liability.
The solar tax credit can be used 20 years going forward for your federal tax liability, or one year going back. If you’re thinking about going solar and you want to know how the solar tax credit can benefit you, get in touch with one of our solar experts today. Call us (951) 805-1262 today to learn more about photovoltaic energy and how the solar tax credit can help you too!