Solar Energy Savings
Time Is Running Out
If you are thinking of installing solar panels, 2019 is a great time to do it. Legislation extended and changed the Investment Tax Credit (ITC) back in 2015 and we are now coming up on the start of the phase out period for this beneficial credit. For those who are interested in taking advantage of this credit before it begins to phase down, here is what you need to know.
- Whether you are interested for your business or residence, you must own the solar panels in order to get the ITC. Many solar companies offer programs where they will lease you the equipment but to take advantage of the credit you must own the panels. If buying a system isn’t in the budget, make sure the leasing company is passing some of the credit savings on to you! If you are a business, the leasing company may be able to pass the ownership on to you.
- Start construction on the panels before December 31, 2019. To take advantage of the full 30% credit the project must be started by December 31, 2019, after that the credit will gradually phase down.
- File IRS Form 5695 for Residential Energy Credits with your individual tax return to claim your credit. If you are a business then you will use IRS Form 3468 Investment Credit. Keep in mind that this is a non-refundable tax credit and will reduce your tax liability dollar for dollar.
- Don’t forget about state solar incentives. Connecticut exempts solar energy property from property tax and offers additional incentives related to energy production and use. Check out Energize Connecticut for more information. DSIRE also provides a great resource for finding incentives inside and outside of Connecticut.
- The calculation of the credit differs slightly for individuals and businesses, individuals will use the net installed cost (the cost of the system less state incentives) and businesses will use the total cost of the system (any state incentives received are considered income).
There are numerous opportunities to save on implementing an array of clean energy systems. If you are looking for more information solar and other alternative energy sources and credits check out Energy.gov.
Contact Us with Your Questions
If you have questions or need help with solar credits, contact our professionals at The Innovative CPA Group at 203-489-0612. Or contact us online.