As the proud owner of a brand spankin’ new residential solar PV system, you have no doubt been enjoying the energy savings the sun provides as you march deeper into a new year. But now that the installation of your custom solar system is finished and tax season approaches, what are the mechanics of taking advantage of the federal incentives you were promised last year?
CAM Solar has been helping our solar customers in Austin, San Antonio, TX, Denver and Colorado Springs, CO get the most out of their solar savings. So as the Federal Investment Tax Credit (ITC) winds down in its final year of full value, here are the details you need to know to get your 30%!
How the Federal Investment Tax Credit Works
The equation is simple: take the entire cost of your solar installation (yes, all expenses related to your solar installation—did you keep your receipts?) and enter them into IRS form 5695 (download the PDF file here). You can also add any qualifying solar water heater, wind energy, or geothermal costs here as well, if 2018 was the year of green energy for you and your family!
Then, multiply the total by 0.30. This will give you the 30% renewable energy deduction that you can then use on your standard 1040 tax form. This all means that if your solar installation costs totaled $25,000, you can deduct $7,500 (25,000 x .30 = 7,500) from what you owe on your federal taxes.
Rolling Over the Solar Savings
A little known fact about the Federal ITC is that your deduction can actually roll over to the next year as well, if your deduction is more than what you owe on this year's taxes. So if your deduction is $7,500, but you only owe $4,000 on your 2018 taxes, you can save that remaining $3,500 and deduct it on your 2019 taxes.
The Final Year of the Full Federal ITC
If you haven’t taken the plunge into renewable energy yet, you are running out of time to get the full value of this renewable incentive. Though the Federal ITC was extended back in 2015, it will begin to trickle down in value after 2019. You can still take advantage of the 30% until the end of this year, but for systems installed in 2020, the deduction goes down to 26%, then 22% in 2021, and then will be eliminated for residential systems in 2022 (though commercial solar systems are still eligible for a 10% deduction, indefinitely.)
Need a Little Help with Your Solar Paperwork?
One of the many benefits of partnering with CAM Solar for your Texas or Colorado solar installation is that we will assist you in finding any manufacturer or state agency rebates and tax incentives. (You can browse our incentive lists for both Texas and Colorado.) And after we locate all of the rebates you qualify for, we will even help you file all the proper paperwork involved. We know going solar is an investment in your own energy independence as well as the sustainability of your home, and CAM Solar will remain by your side until you’ve received as much money back as possible for your solar installation!