Being environment friendly and being able to save a lot of money are a very good combination. To do these, your new best friends are The Energy Policy Act of 2005, The Energy Improvement and Extension Act of 2008 and The American Recovery and Reinvestment Act of 2009. These are the laws that contributed to the Federal Investment Tax Credit (ITC) for Solar PV. Through this, you can get tax credit of up to 30% of the cost of a solar photovoltaic system if you choose to have these panels installed for your home and help in reducing your imprint on the environment.
To claim your tax credit, you need to complete a form 5695 with your federal income tax return, 1040 or 1040NR. These forms are available in the IRS website. What is good about the tax credit is that you can use it against the alternative minimum tax. If the credit exceeds your liability, you cannot claim it as a refund. Instead, you can use the remaining credit for the following year’s tax filing.
Are you qualified for a tax credit? If your solar panel was installed between January 1, 2006 and December 31, 2016, then, yes. Make sure that your solar panel was fully operational during this period in order for you to be qualified for the credit. Your solar panel should also be located in your residence in the U.S. Finally, the solar panels should have been bought and not rented and that it is brand new and not being re-used.
Aside from these, there are other ways to ensure that you can get credit from ITC. This tax credit for solar PVs is a move by the US government towards promoting renewable energy, specifically for residential properties. It is important that homeowners are aware of the various guidelines that would allow you to save money and help save the environment.
Here are some conditions to help you out.
What rebates or other credits can count against the federal tax credit? First, if your state gives you credit for installing solar panels for your home, you do not need to worry about how to compute for your federal tax credit. Both are calculated based on the total cost of the installation of the solar panels minus any rebates or grants you received. On the other hand, if you received rebates from your utility company for the installation of these panels, your federal tax credit is computed minus the rebates your received.
What if you decided to have your solar panels installed in phases and not as a one off expense or installation? You can still get credit for the installation of the solar panel, only as soon as the whole system has been installed, approved and ready for use. So, make sure that you keep all the receipts of expenses for the installation of your solar panel. This way, you can claim all your expenses once your panels are ready.
What properties are qualified for the tax credit and who can claim the credit? Basically, all residential properties are qualified for tax credit. If your home is a rental property, it may not be qualified for tax credit. You will need to discuss the specifics with your accountant. If you purchased a home with a solar panel already installed, you can claim tax credit for the panels, provided that the original owner or builder has not done so. Also, if you install panels in your home and decide to sell the property later on, you can still qualify for the federal tax credits.
There are some other conditions that may help you get the maximum tax credit for being good to the environment. Do not give in easily, do your research and check with your accountant before finalizing and submitting your tax return. Remember, you are doing a good thing for the environment or at least have been planning to do so and you deserve to be able to save as much money as you can, even the government agrees with that.