If you’ve installed a renewable energy device for your home this year, you’ve made a wise choice that will help you save on energy bills for years to come. Did you also know that congress has extended the solar panel tax credit, also known as the investment tax credit (ITC)? This makes solar energy an affordable choice for many Americans and allows you to deduct 30% of installation costs when completing your federal tax return.
Who is eligible?
To be eligible for the 30% tax credit, your solar panels must be installed by the 31st of December. You must own your home and the solar panels installed. If you lease your solar panels through a third-party, you do not qualify for the tax credit. Even if you are purchasing your solar panels with a loan, you will still qualify to claim the solar panel tax credit. Additionally, your tax liability must be enough to receive a 30% tax credit.
How to claim the solar panel credit
You will need to complete IRS Form 5695 (Residential Energy Credits) to claim your solar panel tax credit on your federal tax return. You will also need to add the renewable energy tax credit information to IRS form 1040. You can claim the credit if you have added any of these renewable energy devices before Dec. 31: solar panels, geothermal heat pumps, small wind turbines, fuel cells or a solar water heating system. You will need to have on hand your receipts showing your total installation cost (the installation cost minus any cash rebate you received). Here are instructions from the IRS for completing Form 5695. If you have any additional questions about completing the solar panel tax credit form, consult with a tax professional.
Solar is the energy choice of homes for the future. It is environmentally friendly and saves on energy bills—and who doesn’t want a 30% tax credit on federal taxes? If you qualify, make sure you claim your solar tax savings!
