Tax credit refers to a specific sum of money that taxpayers can remove from taxes they owe the government. Tax credits cut the amount owed in taxes, unlike deductions that cut the cost of taxable income. Recently, Congress extended tax credits to homeowners who want to use solar energy in their homes. Congress moved the deadline to apply for the Federal Solar investment tax credit (ITC). With the ITC, owners of commercial, residential, and utility-scale solar projects can now receive a tax credit. This is a step in the right direction for solar homeowners in Florida. To partake in this new development, you need a good solar company to install your solar units. 1 Stop Solar is the best Florida solar company for guidance on Investment Tax credit and the cost of solar. Take a closer look to understand the ITC further.
How Tax Credit Can Offset The Cost Of Solar
The tax credit for solar comes at a percent of what it costs to install the solar system, so residents have something more economical to use. The 2020 economic stimulus package entails an extension of the federal solar ITC by two years. Florida solar company provides proper guidance to benefit from this opportunity. With your annual federal tax return, you can claim your ITC. However, not all customers are eligible for this. That’s why we recommend you speak to your tax advisor first to confirm your eligibility and how you can apply the tax credit to certain circumstances.
How Does Tax Credit Work?
The tax credit is a dollar-for-dollar tax, and it applies to income taxes owed. It implies that if you owe $2,000 in federal taxes and qualify for $2,000 ITC, you can pay off your debt easily using credit. If your tax is not high enough to claim all the credit in one year, you can roll over what is left to future years so long as your tax credit is effective. Expenses included in your investment tax credit include:
- Solar panels and other equipment used for installation, such as wiring, mounting equipment, and inverters
- The cost of contractor labor used during installation with inspection costs, and
- permitting fees
all fall into this category. Solar storage units also qualify, provided the solar panels charge them in the storage system.
Is This Applicable To Anyone That Uses Solar Energy In The House?
The investment tax credit applies to people who buy their solar system. For homeowners who use solar power purchase agreement (PPA) or lease their equipment, they cannot receive this tax credit. But there are exceptions in PPA agreements and leasing. Those who fund their solar with loans are also eligible. Likewise, those who have solar installation are not left out, especially if they contributed to its installation.
Some states provide incentives for solar installation, and sometimes federal tax credits don’t affect state tax incentives.
Find out how you can help build a sustainable environment by installing a solar unit and saving money on electricity. Visit our website or send us an email to speak with one of our experts at 1 Stop Solar to learn more about how tax credit can offset the cost of solar. As our name implies, we are the one-stop Florida solar company with all the solutions to helping you install your solar system and get tax credits.