It’s that time of year again—the clocks are rolling back, the temperatures are dropping, and Starbucks just debuted 2018 holiday cups that are undeniably noncontroversial. Life is good, but it’s about to get even better, because this year you have an extra reason to get excited about the season: you went solar in 2018 and now it’s time to claim your 30% tax credit to bring in the New Year. Halloween is over, so don’t be haunted by the complicated tax forms of years past, we’re here to guide you through the process and make sure it’s not a difficult task.If you’re browsing this blog and you HAVEN’T gone solar yet, we feel obligated to remind you that time is running out to take advantage of this tax credit. 30% off the price of your system isn’t pocket change friends, and it decreases at the end of 2019.DISCLAIMER:We are solar experts, not CPAs. The following example is generic and only intended to act as a general reference. Before filing your taxes, please consult your certified tax professional to make sure that all your information is accurate and filled out according to IRS guidelines.Our step-by-step guide has an easy to follow example with pictures for reference. Without further ado let’s begin.What You Need to Begin:
- The invoice for your solar installation (if you do not receive this by 12/30/2018, please email firstname.lastname@example.org.)
- IRS Form 1040 for 2018
- IRS Form 5695 for 2018
- Pencil-nobody’s perfect so please put down your ink pens and fine point sharpies
- A snack, preferably one that won’t smudge your forms. Plain wheat thins are a safe choice-grease free and small enough to eat in one bite so you don’t have to worry about crumbs.
- A drink in case you get thirsty, preferably water for optimum hydration or coffee if you started dozing off 2 paragraphs ago.
- A calculator
* Note that your total qualified solar electric property costs are the costs after the rebate. So, if your total system cost was $35,000 and your CPS rebate was $5,000, the amount on line 1 would be $30,000.
What is a Qualified Solar Electric Property Cost?
“Qualified solar electric property costs are costs for property that uses solar energy to generate electricityfor use in your home located in the United States. No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed. The home doesn’t have to be your main home.”
Multiply the amount in line 5 by 30% and skip to line 12 (unless you answered yes to 7a). If you are carrying unused credit from the past year, enter the amount in line 12.
For line 13, add the total of lines 6, 11, and 12.
Line 14 is where things can get tricky and requires the use of the worksheet below and your Form 1040.
For the purposes of keeping this example simple, the amount on line 1 of our worksheet will be $5,000. All others will be blank, which means line 11 of the worksheet will be $5,000 as well and that is the amount we will use on line 14 of Form 5695.
Because Sunny Ray only owes $5,000 in taxes this year, that is the maximum amount of credit he can claim now. He will enter that amount on lines 14 and 15 of Form 5695, and enter $4,000 on line 16 (the difference between his total credit of $9,000 and the credit he can take this year, $5,000.)
The last step is to enter the amount from line 15 on line 53 of your Form 1040.
And that’s it! Please remember that this is just one scenario and meant to serve as a simple example of the calculations needed to claim your solar tax credit. Always refer to a tax professional before filing your taxes if you need further assistance or are unsure if you have done the correct calculations.