How to Fill Out Your Solar Tax Credit Forms Posted on 16 Nov 10:30
The federal solar tax credit provides a significant financial boost to those consumers who seek affordable energy independence. Although state and local incentives can also help make PV energy more affordable, the 30 percent federal incentive has put this technology within reach for many Americans.
Even if you install your own solar power system, you’re still eligible for the credit!
Of course, applying for the tax credit involves the usual mishmash of government paperwork and forms. Read on to learn more about this lucrative incentive and how to negotiate the potentially complex process of applying for it.
What Is the Federal Tax Credit?
Complete photovoltaic systems and emergency backup systems are eligible for the federal tax incentive. This credit reduces your federal income tax liability by 30 percent. The credit is essentially an offset against your tax liability and it can be carried forward year after year until you’ve used it up. Currently the government imposes no maximum dollar amount on the credit.
A word of warning, however: This incentive amount will be valid only for systems that are placed in service before Dec. 31, 2016. This means that the system must be up and running by that deadline in order to qualify, so don’t waste time getting started on yours!
How Do I Claim the Credit?
To receive your federal incentive for professionally installed or DIY solar systems, you must complete the necessary documentation and submit that paperwork when you file your income taxes with the IRS. The Residential Energy Credits paperwork, form 5695, is used to calculate the amount of your credit. You also need the accompanying instruction form here.
To complete the form correctly, you must determine the amount of your qualified solar electric property costs and the system’s kilowatt capacity. You are entitled to include labor costs for site preparation, installation costs, any piping or wiring required and of course, the cost of the system itself.
Claim your solar tax credit using the standard 1040 income tax reporting form.
Getting Help with Solar Tax Paperwork
Thinking about filing your own taxes this year? Unless you have a solid understanding of the Residential Energy Credits form, you will need to do some research to fill it out properly. Any errors could mean that you end up with a smaller credit than you’re entitled to. Because this credit will offset a good portion of your photovoltaic system and installation costs, you may want to get help with the process.We always recommend speaking with a tax professional to get the best information.
Solar GOODS, your DIY solar superstore, offers this helpful service to its customers at a reasonable cost. And since we know exactly what’s allowed in the calculations, you’ll never have to worry about losing out on any part of your federal credit. You’ll find our federal solar tax credit document prep service here.