*Disclaimer: NATiVE is not a tax expert. This blog is just the basic info on the Solar Tax Credit (ITC – investment tax credit).
Please consult with your tax professional.
It’s that time of year again—tax time!
But this year is different, because 2016 was the year you installed solar panels on your home, 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!
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? Get a FREE Quote from NATiVE for your solar panel system!
Solar tax credit FAQ:
Q: What is the solar tax credit?
A: Officially called the “solar investment tax credit” or ITC, it’s a dollar-for-dollar reduction in the federal tax bill of any homeowner who pays for a solar installation.
Q: How much do I get back from the solar tax credit?
A: 30% of costs, through 2019.
If you’re a homeowner who buys a solar panel system, you’re entitled to a tax credit of up to 30% of the total cost of that system. You can wipe out your entire tax bill if your credit is high enough, and you can take the credit over 2 years if you don’t owe that much taxes. For example, if you spend $20,000 on a solar system, your 30% tax credit would be $6,000. But if you only owe $4,600 in taxes for 2015, your tax bill will be reduced to zero, and you’ll receive an additional $1,400 tax credit on your 2016 return.
Q: Will the solar tax credit expire after 2019?
A: Nope! The residential solar tax credit will continue at 30% through the end of 2019, then “step down” to zero after 2022.
Q: Why does the ITC exist at all? Shouldn’t the industry stand on its own two feet?
A: Lots of businesses get subsidies from the government, and solar is one of the most important future planning technologies there is!
Solar is a key part of our nation’s plan to get off fossil fuels and help make a more reliable, sustainable energy future. But the ITC does more than that; the taxpayer investment in solar creates jobs, reduces prices for solar for everyone, and ensures this still-new industry grows large enough to sustain itself for long into the future.
What you need to claim the solar tax credit
KEEP IN MIND: We are solar guys, not tax guys. We do not give tax advice, and anything you read on this page is merely one example of how someone might act. Please consult a tax professional before filing.
- The receipts for your solar installation
- IRS Form 1040 for 2016
- IRS Form 5695 for 2016
- Instructions for both those forms
Fill out your Form 1040 as you normally would. Stop when you get down to line 53, and move to Form 5695. Write or type your name in the space provided.