Can You Get Tax Breaks for Investing in Solar Energy?
The question might be: Then why aren’t more people doing it then?
That is because solar energy is still fairly new for public consumption, and like anything new in the world of technology, it’s expensive!
What are the Benefits of Solar Energy?
Solar energy is a natural form of harvesting energy and is the alternative to coal and other resources. The idea being, if we can continue to harvest solar energy, then we won’t be so dependent on these other sources that may either already be scarce or just too expensive to keep buying. It may sound odd saying this, but right now, harvesting natural solar energy is a luxury.
The United States government recognizes this, but also understands the importance of growing and sustaining the resources for solar energy and making that accessible to the American people. That is why the United States Environmental Protection Agency and the Department of Energy have partnered up to create the Energy Star program that provides tax credits for solar powered systems.
Solar Energy Tax Credit Explained
You are basically rewarded for investing in solar energy. Because it’s expensive, you’ll have the option of claiming up to 30% of the cost on your annual tax fillings. So if you’re investing $10,000 into solar panels, you’ll be able to claim a $3,000 credit on your annual tax filing. So even though you’ll need to pay for your solar energy upfront, you can be at ease knowing that you’ll get up to 30% of that expense back the following year.
Are There Any Exceptions?
With everything, of course there are exceptions. Although this one needs to be understood carefully: you won’t be able to claim this credit for rental properties you own. Even though you legally own the property and pay taxes on it, you will not be able to claim a solar tax credit for any solar powered systems invested in that dwelling.
The reason is because you have to live there in order to take advantage of the solar energy. For vacation homes, if you live in that dwelling six months out of the year, you’ll need to reduce the percentage amount that you’re claiming on your annual filing.
Another exception is if your credit ends up being more than what is owed on your income tax, you’ll have to carry the difference onto the following year. You won’t be able to get cash back for your solar tax credit.
How Do I Claim This Tax Credit?
In order to claim this tax credit, you’ll need to fill out Form 5695 when filing your annual return and submit it along with the rest of your documents.
Still Need Help?
The more credits you’re able to take advantage of, the more complicated annual tax filings tend to be for some people. With every tax credit, there is additional paperwork that needs to support it. If you find that you might need some assistance claiming your solar tax credit, just email the knowledgeable team at Success Tax Relief. Call us today at 877-825-1179 or contact us online.