Harnessing the power of solar energy has become increasingly popular for the potential financial benefits it offers. But before reaching out to a solar company right away, know the things involved in solar tax credits first:
- The solar tax credit, also known as the Investment Tax Credit (ITC), allows you to deduct a portion of your solar system installation costs from your federal taxes.
- To qualify for the said tax credit, you must own the solar system (it cannot be leased) and be installed on your primary residence. Additionally, the solar panels must meet certain efficiency and certification criteria.
- Keep all records of all expenses related to your solar panel installation, including all equipment, labor, and permits.
- Given the complexity of tax regulations, you must consult with a tax professional or a certified solar installer who is well-versed in solar tax credits.
- Before claiming the solar tax credit, you’ll need to complete IRS Form 5695 (Residential Energy Credits) and include it with your annual tax return.
- Many local governments and states offer incentives and rebates for solar installations. Research these programs in your area to see if you can further reduce your upfront costs or earn additional savings.
By understanding the solar tax credit, meeting eligibility requirements, keeping track of installation costs, seeking professional guidance, and filing the necessary paperwork, you can take full advantage of the financial benefits offered by the services offered by your solar company.
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