Questions about Tax Credits

image1

Question: Are there any Tax Credits, Rebates or Grants available?


Answer: Yes. Currently there are IRS Federal Renewable Tax Credits still available in 2020 and they are scheduled to sunset after 2021. For 2020, the Tax Credit is 26% of the project amount and they will be reduced to 21% in 2021. Here is a ink to the IRS Federal Tax Credit and Form 5695.

Question: Does the design, engineering, permit, PG&E Fees, and Installation costs also qualify for the Renewable Tax Credit?


Answer: Yes. The entire projects costs qualify for the IRS Federal Renewable Tax Credit, include Energy Storage (Battery back-up) Systems.

Question: If we wanted to build a patio shade structure, and have Solar installed on it; does the patio cover qualify for the IRS Federal Renewable Tax Credits?


Answer: Yes. If the Solar is installed as part of the overall project.

Question: How do I get the Tax Credit?


Answer: With the Renewable Energy Tax Credit, you simply subtract your credit amount from the total tax the IRS says you must pay. (There is no limit on the price of the solar system installation you choose.) 


The Tax Credit is very different from a Tax Deduction, which only reduces the amount of income you pay taxes on. 


“A $100 credit is worth $100 regardless of your tax rate,” says Kevin Martin, Principal Tax Research Analyst at H&R Block in Kansas City, Mo.


If you cannot use all of the credit in one tax year, you can carry it over into later tax years, Martin says. If, say, your federal taxes are $6,000 for 2020 and you are eligible for a $7,000 tax credit for installing a solar system at your house, you can claim the leftover $1,000 as a credit toward your 2021 taxes.

Question: Does a “Second Home” qualify for the IRS Federal Renewable Tax Credits?


Answer: Yes. Solar installed in a property that you live in for at least part of the year. That could cover, for instance, a second home that you rent out when you are not there. The credit is prorated based on how much time you spend in the residence.