A Solar tax credit reduces amount you owe IRS on a Dollar-for-Dollar basis. So, if your solar tax credit is $10,000, then the government will provide either a check to you or reduce tax owed to them. For example, if your employer takes taxes out of your check each pay day, then the government would write you a check. If you are self-employed, the amount you pay the government is reduced by the solar credit. Also, if the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year.
How big a tax credit can you get? The tax code provides for an unlimited credit amount. So, you can get as much solar tax credit as you want.
30% Solar Tax Credit Available until 2019
You many claim a credit of 30% of qualified expenditures for a solar system that serves your house. The house must be located in the United States; and you must own and reside in the home. Expenditures are considered to be made when the installation is complete. If the installation is at a new home, the “placed in service” date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and piping or wiring to interconnect a system. Solar property installed as a structural component with solar panels, constitutes part of an original assembly.
Solar Tax Credit DETAILS
- 30% for systems placed in service by 12/31/2019
- 26% for systems placed in service after 12/31/2019 and before 01/01/2021
- 22% for systems placed in service after 12/31/2020 and before 01/01/2022
- There is no maximum credit for systems placed in service after 2008.
- The home served by the system does not have to be the taxpayer’s principal residence.
- The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
For More Information visit the IRS Get Credit for Making Your Home Energy-Efficient page.