With 2022 official “over the hill”, time is running out for homeowners to claim the ITC Solar Tax Credit at 26 percent. After December 31, 2022, this credit will downgrade to 22 percent and that could mean missing out on thousands of dollars in savings. So what do you need to do to claim the 26 percent solar tax credit before time runs out? This article will tell you everything you need to know.
Make Your Purchase Before December 2022
You have some time left to take advantage of the 26 percent option if your solar power system is purchased, installed, and approved before the end of December 2022. All purchases made in 2022 will be eligible, but systems must be installed and approved by the city. This means that homeowners should begin the process by early fall to ensure they do not miss this deadline.
Depending on the system you purchase, the difference between 26 percent and 22 percent is several hundred dollars. A $15,000 solar system purchase at 26 percent will earn a credit of $3900. That difference can go from hundreds to a few thousand dollars for larger solar systems and projects.
In order to get the 26% ITC credit, the solar system MUST be installed and turned on (PTO- permission to turn on) by December 31, 2022. Anyone interested in going solar before Dec 31, needs to have signed with a premiere Solar Company like Solar Optimum in October to better your chances of getting the installation done and PTO.
How Does The ITC Solar Tax Credit Work?
When you apply for this tax credit on your federal income taxes, it reduces the amount that you have to pay overall. When you file your taxes for the 2022 year, you need to list your solar system purchases under this tax credit so that they can be applied and deducted from the amount you owe to the government.
When applying for the ITC Solar Tax Credit, you need to include the 5695 IRS Form as an addendum to your tax form. You will calculate the credit based on the overall cost from the total in 6a. These credits include the following in lines 1-5, where solar property costs are listed:
- Qualified solar electric property costs
- Eligible solar water heating property costs
- Eligible small wind energy property costs
- Eligible geothermal energy property costs
- Eligible biomass fuel property costs
Depending on what other energy purchases over the last year, you could have a substantial return at the 26 percent rate. Maximizing your tax credit potential allows you to get even more out of your solar system and increase your overall saving costs.
Are You Ready To Make A Purchase?
If you have been on the fence about moving forward with your solar system purchase, there is no better time than now to move forward. There has been no indication that this tax credit will be extended.
At Solar Optimum, we are industry leaders and can answer any questions you may have regarding a solar system for your property. Contact us today for a free consultation and estimate on your solar system. Let us help you start saving on energy and earn back the ITC tax credit you deserve.