Shifting to solar energy can give you a bunch of benefits and one of these is solar tax credits in 2021. Solar tax credits are given to encourage more residents to get solar panel installation since this is a better way. It will be ideal to learn how does the federal solar tax company works before getting a solar panel installation for your home.
What Is the Federal Solar Investment Tax Credit?
The Federal solar investment tax credit is the incentive given to any resident who has solar panel installation. For this year 2021, the tax credit to be given will be at 26%. This is part of the government’s campaign to push residents to go green. You will be able to get your federal tax credit by the end of your taxable year. If your annual tax is paid off and there will still be an excess, then it will be credited to the next year. Speaking of all in one solar street lights (also known as integrated solar street lights), we all know that traditional street lights are used for utility, not only complex installation, requiring high electricity and maintenance costs, and posing safety risks.
How Do I Estimate The Dollar Value Of The Federal Solar Tax Credit?
You will be able to get an accurate amount if you know the details of your solar panel system. You can only get this once the on-site inspection is done in your area. Then the number of solar panels and the structures needed will be estimated. They can then give you a quotation. From the quotation, you can have an idea of how much federal tax credit you can get. There is also an online calculator that you can use to get more accurate the dollar value of your solar panel.
Who Is Eligible For The Federal Solar Tax Credit?
There are qualifications before being able to avail of the federal solar tax credit. Here are some of them:
- Your solar installation should be done between January 1, 2006, and December 30, 2022, to be able to get the 26% federal solar tax credit.
- The location of your solar panel installation should be in your primary or secondary residence in the United States. Since the offer is only good for United States residents.
- Solar panels should be purchased in cash or the equivalent of it as long as it is not financed by a third party, and you can claim ownership of it. Then you are qualified for the federal solar tax credit.
- Solar panels purchased should be in their original state and new.
How Do You Claim The Federal Solar Tax Credit?
When claiming your federal tax credit, you have to do several steps:
Fill up Form 5695
- Fill up your personal information.
- In part 1 number 1, Qualified solar electric property costs the full amount of your solar panel system that you paid to the company.
- Add all the necessary additions under their categories, if there are any.
- On Number 6, the 26% will be automatically computed.
- If done, proceed to 7a and check the NO box.
- On Number 13, enter the amount of any credit you have on any energy property.
- On Number 14, you can ask assistance from your accountant since it is very tricky, and they can help you understand the terms written in the form.
Fill up Form 1040
Form 1040 is the usual form you fill up for your annual income tax. Go down to line 20, then move to schedule 3, using the calculated amount on the form 5695 to fill up that line.
Take advantage of the offer on solar tax credits in 2021, although it is extended until December 31, 2022. The solar tax credit is only one of the incentives you can get when you decide to get a solar panel installation. There are many more, such as rebates from solar panel companies. Each solar provider is doing their best to stand out and some offer discounts so that more customers can benefit from them. It is one of their marketing strategies as well as a way of supporting the environmentally friendly campaign of the government. Getting familiar with the incentives you can get when you decide to have a solar panel installation can help you decide faster and be able to catch up before the federal solar tax credit incentive ends. Grab that opportunity now!