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Federal Tax Incentives
Please note: At Everlight Solar, we are solar experts, not tax experts! Tax codes are complicated, so consult your tax advisor before deciding what is best for you. If you have questions regarding your Federal Investment Tax Credit or IRS Form 5695, do not refer questions to your Energy Consultant or Everlight Solar. Rather, you should discuss your situation with your CPA or other qualified tax advisor. Everlight Solar is not responsible for or liable for any errors or omissions in regards to your personal tax and finance situation or obligations.
First things first: Am I eligible for the solar tax credit?
- You are eligible for the Federal ITC as long as you own your solar energy system. You are also eligible even if the solar energy system is not on your primary residence – as long as you own the property and live in it for part of the year, you can claim the solar tax credit.
- If your federal tax liability is lower than the total amount of your ITC savings, you can still take advantage of it by carrying over any remaining credits to the following year.
- Here’s an example: You pay $20,000 to install a solar system on your home in 2018, which means you are eligible for a $6,000 federal solar tax credit. If your federal tax liability for 2018 is only $4,500, you will owe no federal taxes that year, and in 2020, you will reduce your tax liability by $1,500.
How do I get the 2020 Federal Tax Incentive for my solar panels?
There’s plenty of information out there about the value of the residential ITC, but figuring out how to actually claim the credit when it comes time to file your taxes is another story. We’ll walk you through the instructions step by step from Form 5695 to Form 1040. Find specific information on this web page: https://www.irs.gov/forms-pubs/about-form-5695
Form 5695 Instructions: The 3 steps to claim the solar tax credit
- Determine if you are eligible for the Federal ITC
- Complete IRS Form 5965 to validate your qualification for renewable energy credits
- Add your renewable energy credit information to your typical form 1040