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Time is of the essence for homeowners to get the most value out of going solar in 2020. The biggest active solar incentive, the Federal Solar Investment Tax Credit (ITC), is set to step down at the end of the year.
What is the Federal ITC?
The Federal Solar Investment Tax Credit (ITC) is a program that allows homeowners to claim a credit on their federal taxes in the amount of 26% of the cost of a solar installation. This credit can be rolled over for up to 5 years if the homeowner’s tax liability is less than the value of the credit.
What’s the hurry?
The ITC is scheduled to step down in value from 26% to 22% at the end of this year. Homeowners who want to take advantage of the full value of the tax credit need to have panels installed by Dec. 31st, 2020. If you sign a contract to go solar in 2020, but installation isn’t completed until 2021, you’ll only be eligible for the 22% credit.
Installation timelines typically run 60-90 days. The installation process is influenced by a number of factors, including location, permitting and utility approval processes, and even unpredictable circumstances, such as winter weather. In order to ensure completion of an installation before the end of 2020, we recommend starting the process by August 31.
How do I claim the ITC?
The biggest step to claiming the ITC is going solar (we can help with that). Once that’s taken care of, simply notify your tax preparer. If you file your taxes on your own, you’ll need to fill out a Form 5695 and note the resulting amount in the appropriate line on your Form 1040.
I’m on the fence about solar – what should I do?
Helping homeowners determine whether or not solar makes sense for them is what we do best. If you’re considering going solar in 2020, click below to schedule a consultation with us. We’ll walk you through the decision-making process and answer your questions, with no pressure. We look forward to working with you!