There is a federal tax credit available with the purchase of a solar energy system for a home or business. West Coast Solar customers can take advantage of incredible opportunity, essentially reducing the cost of a solar system by a staggering 30 percent. We recommend that you consult with your tax preparer for further information.
What expenses qualify for the solar tax credit?
Typically, the entire project cost qualifies for the federal tax credit. These expenditures include labor costs to prepare the site and install the system, and all solar equipment.
Is a tax credit the same as a tax deduction?
No, a federal tax credit is typically more valuable to the taxpayer than a writeoff. Both a tax credit and a tax deduction can reduce your tax liability, but they work in different ways. Tax deductions reduce taxable income, thus the value of a deduction depends on your marginal tax rate. A tax credit directly reduces the tax liability by the value of the credit.
If I install a $10,000 solar system, what is the value of the tax credit?
The tax credit is 30% of the installed price, thus the tax credit is $3,000. We recommend also consulting with a tax expert, to ensure that you can take advantage of this opportunity.
What if my personal or business tax liability is less than the value of the tax credit?
If your tax liability is less than the value of the credit, you can apply the credit on the following year’s taxes. Some people or organizations with little or no tax liability may not be able to make full use of the tax credit. We recommend consulting with a tax expert about how to best utilize a federal tax. Keep in mind that leasing a solar system may be more financially advantageous, if you cannot take advantage of the tax credit.
When will I benefit from the tax credit?
If you install a solar system in 2016, you can apply the federal tax credit on your 2016 federal income or business taxes.
How do I apply for a federal tax credit?
Taxpayers can fill out Form 5695 and speak with their tax preparer.
How long is the solar tax credit in effect?
The federal solar tax credit is in effect until the end of 2016, so installations completed by the end of the year qualify. The future of the tax credit in 2017 and beyond is uncertain, so take advantage of this incredible cost-saving opportunity!