Are you intrigued by the long-term financial benefits of solar panels, but still wondering whether you should take the plunge now or later?
Being hesitant is understandable — although the price of solar has dropped by a whopping 70% since 2010, both commercial and residential solar panels are still significant investments. The great thing is, Sun Solar’s numerous budget-friendly financing options, as well as local solar rebates, help you get the cost-saving benefits of solar without a huge up-front cost.
So, if price is an object for you, it’s time to stop seesawing; 2019’s the year to go solar.
Because you probably qualify for the U.S. Government’s generous 30% Federal Solar Tax Credit — and it won’t be around after the end of 2019.
First, it’s dropping to 26% for systems activated in 2020.
Then it’ll drop to 22% for systems activated in 2021.
After 2021, it’ll expire completely for home solar systems!
Commercial systems are currently scheduled to receive a permanent 10% rebate even after 2021; however, if you wait that long, your business will only get ⅓ of the 30% credit available right now.
To help you take advantage of this sweet tax credit, here’s our short, simple guide to potentially saving thousands on your solar system with the FTC. Please remember though, we’re solar professionals, not tax professionals! We cannot offer professional tax advice, determine your eligibility for this tax credit, or guarantee that you will receive it. We always recommend that you consult your tax professional.
That being clear, let’s dive into the guide:
1. What’s the Federal Solar Tax Credit & How Can It Help Me?
The Federal Solar Tax Credit allows taxpayers who purchase a solar system to claim a credit on their expenses for that system when filing their taxes. Essentially, your tax credit for that year will include up to a third (until the end of 2019) of your total cost of going solar.
For an average-sized 10kW system in Missouri, the Federal Tax Credit often saves customers roughly $5,000-$10,000 — on top of all the other incentives they’re currently eligible for. If you cannot use all the tax credit at once, ask your tax adviser about carrying the credit forward for years to come.
2. What Expenses Qualify for This Credit?
Qualifying expenses include:
- Labor costs
- On-site preparation
- Installation costs
- The panels themselves
- Other necessary components, including inverters and wiring
- Removing trees, if necessary, to enhance your solar production
In short, the entire value of your solar quote can usually be included when applying for the credit.
3. Do I Qualify for the Federal Solar Tax Credit?
While we can’t guarantee anything (again, we specialize in solar, not taxes!) we can give some guidelines:
- Do You Own Your Solar System?
Only owners of residential or commercial solar systems are eligible. If you’re leasing your panels instead of buying or financing them, savings have already been factored into the payment designed for you since you aren’t the owner of the equipment; therefore, you cannot personally take advantage of this credit.
- Do You Pay Taxes?
Generally, only people who pay taxes get tax breaks. Tax credits, however, are applied directly to any federal taxes owed throughout the year and are based off anything that’s considered income for you.
4. When Should I Claim the Solar Tax Credit?
Since your system must be activated by Dec. 31, 2019 to receive all 30% of the credit, the answer is ASAP — we’re filling up fast for 2019 installations, since everyone’s trying to make it under the Dec. 31, 2019 deadline.
Systems activated in 2020 will only receive 26% back from this credit, systems in 2021 only 22%, and systems after that only 10% (for businesses) or none at all (for homeowners.)
Start the solar process as soon as you can to ensure that your system will be installed and activated by the end of 2019.
Once you’ve done that, file for your tax credit on your 2019 tax forms by April 15, 2020.
5. How Do I Claim the Federal Tax Credit?
Once you’ve verified your eligibility with an accountant and your solar system has been installed and activated, fill out Form 5695. Then add that renewable energy credit information to your usual Form 1040 for the year in which you purchased your solar system, and you can look forward to a healthy tax credit for going solar!
…until the end of 2019, that is.
If your tax credit exceeds the amount of taxes owed for that year, the remainder will roll over for years to come –this way, you don’t lose what you don’t use! 🙂
So if you’re planning on going solar, it’s time to get in touch with professional solar consultants (like us) ASAP for a free, no-pressure, no-strings consultation & solar energy quote. We’re happy to answer all your questions about going solar in the Midwest; you can get started by checking out our Solar Savings Calculator or calling 417-413-1786. We’d love to hear from you!
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