How a Solar Power Installation Can Save You Money on Your Taxes
January is when people start to get their taxes in order for the previous year. They collect their W-2’s, gather their receipts and contact their tax preparer. This year, homeowners have the perfect opportunity to save money on their taxes with a solar power installation. The key is to obtain a solar power installation now before the federal solar power tax incentives disappear.
The Federal Solar Tax Credit was established in 2005, a tax credit applied to solar power home installations and solar heating systems and fuel cells. While extended multiple times since 2005, 2019 is the last year for homeowners to take advantage of their first year of solar tax credits on their taxes.
How a Solar Power Installation Can Help Homeowners Save Money
The Federal Solar Tax Credit will soon be phasing out by percentages over the years homeowners have a solar system. Homeowners who obtain a solar power installation in 2019 will be able to obtain a 30% credit, but over the years, this percentage will drop. For instance, in 2020, this credit will drop to 26%, 22% in 2021, and disappear entirely in 2022 for residential solar installations. Businesses with a solar power installation in 2022 can still enjoy a 10% credit, though.
As it currently stands, the 30% credit would be of the total cost of homeowners’ costs for a solar power installation. For example, if a residential solar system installation cost $20,000, the 30% would account for a $6,000 credit on homeowners’ taxes. Depending upon the amount owed in taxes, this could potentially work out to be a nice return for homeowners or potentially owing nothing to the federal government and rolling those credits over to the next year. Depending upon homeowners’ tax situation, this could end up being very lucrative for homeowners.
Qualifying for the Federal Tax Credit
In order to qualify for the federal solar tax credit, homeowners need to meet the following criteria:
- The homeowners’ solar installation must occur prior to December 2019
- Only homeowners, not renters, or business owners will be able to qualify
- Solar panels must be owned, not leased
- Homeowners must owe more than the solar tax credit in taxes in order to take advantage of the federal tax credit
Claiming the Federal Solar Tax Credit
Tax season is in the very beginning. That means over the next few months, tax preparers will be very busy filing taxes on behalf of a variety of homeowners. In order for homeowners to claim their federal solar tax credit, tax preparers should be careful to fill out the forms to collect the Residential Energy Credits. This process can help homeowners to claim the federal solar tax credit for their residential solar power installation.
To install a new solar power installation, consult the experts and call us at (951) 678-7733.