Legal Disclaimer: 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 advisors. Everlight Solar is not responsible for or liable for any errors or omissions in regards to your personal tax and finance situation or obligations. The following is for informational purposes only, and should not be considered instructions or legal advice.
You’ve just installed solar and have heard about Form 5695, but don’t know what it really means. You know it has to do with taxes, and can potentially give you a larger refund for the following tax year. Form 5695 is a lot simpler than you may think, and extremely important when it comes to going solar.
What is Form 5695?
Form 5695 is the IRS document you submit to get credit on your tax returns for installing solar. Also known as the “Residential Energy Credits”, the form calculates tax credits for various qualified residential energy improvements. These include small wind turbines, geothermal heat pumps, solar panels, and more. The form is an IRS document, so you can request a copy from the Internal Revenue Service website to receive one.
Now that you know what the form is, you may be wondering more about what it will get you. Form 5695 is a tax credit, meaning it reduces your federal tax liability. The credit is based on the percentage of the total cost of your solar system. For the year 2022, the tax credit is 26%!
Do I Qualify for the Solar Tax Credit?
You must meet all the requirements below to qualify for the credit.
- The system is located at your primary or secondary residence in the United States.
- You own the solar system through a cash payment or financing.
- The system is the original installation, meaning it’s the first time in use.
If you meet all these requirements, you are eligible for the credit and are then able to move forward in filling out Form 5695.
Where can I go if I have questions about filling out Form 5695?
Filling out any tax form can be a daunting task, but Form 5695 is simpler than you think. Check out the IRS website for the best instructions in filling out the form, or refer to our own demonstration to see how it applies to solar.
Understanding the form is the first step in claiming your tax credit. The only way to get the credit is to have it completed, so be sure to include Form 5695 when you submit your taxes to the IRS. Did the tax credit spark an interest in solar? Schedule a free consultation today!