The Residential Solar Investment Tax Credit (ITC) for the total cost of solar installation goes until 2019 at 30%. Each year after, it will decrease at a rate of 4% per year. So the ITC will be 26% in 2020 and 22% in 2021. It is taken in the tax year that you complete your solar install. You will then file for the tax credit with your tax return before April the following year using the Form 5695. This form has become simpler to file now than in previous years but still has some complications. The two main complications we have found:
- Limitation based on tax liability: this means that you have to have paid the amount in…. to be able to get it back. If you have low income or if you don’t pay federal taxes you will have a tough time taking the tax credit.
- If you can’t take all the tax Credit in the first year you can carry forward for five years.
This Tax Credit is a huge incentive and really helps the progression of solar.
Of course, we don’t know your specific tax situation so please consult a Tax professional to identify exact details for your specific situation.