Updated: Jan 7
Combat Tax Liability with The Investment Tax Credit
It's that dreaded time of year; tax season. On social media, everyone has friends and associates expressing their reaction (and surprise) to filing their annual tax returns for 2018. The common cause: tax reform.
The narrative around the subject varies, but they are all passionate. On one side, there is extensive criticism, describing the reforms as “misleading” and even fraudulent. The other side of the aisle uses their filing to justify the benefits of the program, often attributing the decline in their return to paying less in taxes throughout the year.
At National Energy Partners, we are not about politics. We are about solutions. Here, we provide information about a lucrative opportunity and federal tax incentive that is available for both home and business owners. While this tax incentive was established in 2005, it is set to expire this year. Time is limited. We hope this helps give you a “head-start” to provide a maximum return for your 2019 filing.
The Investment Tax Credit (ITC) – What it is.
The Investment Tax Credit is also known as the Federal Solar Tax Credit and Solar Investment Tax Credit. It is available through the U.S. Federal Government. The ITC provides a dollar-for-dollar tax deduction equal to 30 percent of the total cost of a solar energy system from your Federal Tax filing. Simply put, you can deduct 30 percent of the cost of your solar system's installation. The ITC is available for both home and business owners who convert to solar. Since there is no cap to the value, it is a leading incentive driving the conversion to renewable, solar energy.
The Solar ITC was established by The Energy Policy Act of 2005. The intention of this act was to combat growing energy problems. This Act effectively changed US energy policy. It provided tax incentives (such as the ITC) and loan guarantees for energy production of various types. It also provided sweeping reforms for fossil fuels with added accountability.
Theses policies established America's commitment to renewable, green energy. Today, it is the leading incentive driving the solar industry.
Why the Investment Tax Credit Matters.
The Investment Tax Credit is a leading incentive to convert your home or business to solar energy. There are many benefits to solar energy. Solar energy allows home and business owners to dramatically reduce or eliminate their utility bill. These utility savings are long term. How much would you save each month, if you didn't have to pay a utility bill? How much would you save in a year? 10 years? 20?
How the Investment Tax Credit Works.
Any business or homeowner that OWNS their solar energy system is eligible for the Investment Tax Credit. If you lease your solar panel system or take part in a utility scale project, you are not eligible for the ITC. The ITC applies to those who "own" their solar panel system, whether you purchase it directly or through financing.
Some homeowners might not have enough tax “liability” or enough income tax to claim the benefit in one year. Under new regulations, you can “roll over” the remaining tax credit the following year (as long as the program is still active).
Thanks to new legislation, homeowners are eligible to receive The Investment Tax Credit as soon as construction for the solar panel system begins. New policies require the system to be operational before 2024. Previously, homeowners were not eligible until their solar panel system was in operation.
How to Claim the Investment Tax Credit.
Home and Business owners can claim The Investment Tax Credit when they file their federal tax return. Just inform your accountant that you have converted to solar energy in the last year. Seek tax advice for Form 5695 if you plan to file your own taxes. Be sure to inquire about state solar programs that you qualify for in the process.
Don’t Miss Out!
The Investment Tax Credit has been extremely effective in driving consumers to renewable energy. Due to its popularity, the full benefits of the ITC are available until 2019. If you want to receive the FULL 30% credit, you must convert to solar energy sometime during the 2019 tax year. If you wait to convert to solar energy after 2019, you will likely only receive a fraction of the 30% return.
Currently, Congress has proposed reductions in The Investment Tax Credit, for both home and business owners. For the 2020 tax year, both home and business owners are projected to receive 26 percent incentive. This figure will drop to just 22 percent for 2021. This year will mark the end of the program for homeowners. In 2022, commercial projects will be eligible for a ten percent incentive.
Benefits of Solar Energy.
In addition to the Solar ITC, there are MANY benefits of converting your home or business to solar renewable energy. Increase energy efficiency, combat the soaring costs of service from utility companies, eliminate your electric bills and more. Learn about the complete benefits of solar installation today!
About National Energy Partners:
National Energy Partners (NEP) is a solar energy development company dedicated to bringing clean, renewable energy to businesses and residential consumers alike. NEP is at the forefront of the solar energy landscape. Our passion is in fostering relationships through integrity, knowledge, and efficiency. NEP embraces the specific needs and challenges of each project. We prioritize our valued clients through strategic management, trusted relationships, and eco-friendly solar energy solutions.
NEP has 10+ years of experience in the solar industry. Our portfolio includes over $100 million of projects, with more in development.