Have you thought about how you can take full advantage of the Sun before the end of the year? If you have installed solar panels on your home or property during 2020 then you could get a twenty six percent tax credit for your purchase! The tax credit for solar photovoltaics allows you to get tax credit for not only the hardware that you installed, but also the labor costs and more. Here is a quick breakdown of what this tax credit covers.
To qualify for the Solar Tax Credit you must have a completed installation that currently generates electricity for your home that is located in the United States. As long as the installation is complete by December 31st, 2020, you get a 26% tax credit on your federal income tax liability. This is a limited time tax credit because after the 31st of December the credit drops to 22% in 2021 and then ends on January 1st, 2022 unless Congress decides to extend the program.
If you have been considering adding solar power to your home or even a vacation home, then installing sooner is going to give you a much more favorable tax credit than waiting. You also qualify for this tax credit if you purchase a new home that has solar installed, but you only qualify on original solar installation. This means that you cannot claim this credit if you buy a home that has had solar installed by the previous owner. This tax credit also covers more than just the solar panels; it also covers, onsite contractor costs, inverters, wiring, mounting racks, energy storage devices, and even sales tax on eligible expenses.
Another thing to keep in mind is that many state governments also offer incentives and rebate on solar installs. Definitely take the time to learn the specific rebates offered by your state. State incentives and credits may also affect the final total cost that is eligible for the tax credit. To learn more about how your tax credit can be affected and some more specifics view the Guide provided by the US Department of Energy
To learn how your solar installation will affect your taxes and how to take advantage of this amazing tax credit before it is gone, reach out to your CPA or call Trailhead Tax Center for more information.
