Last-Minute Tax Tips for Claiming Your Solar Credit This Year
If you’re racing against the tax deadline and hoping to cash in on your solar investment, you’re in the right place. Claiming your solar tax credit doesn’t have to be overwhelming—even if you’re doing it at the eleventh hour. In this guide, we’ll break down everything you need to know about the federal solar tax credit, plus a few extra tips to make sure you get the most bang for your buck before the IRS shuts the door for the year.
What Is the Federal Solar Tax Credit?
The Federal Investment Tax Credit (ITC) lets you deduct a percentage of the cost of installing a solar energy system from your federal taxes. For systems installed between 2022 and 2032, that credit is a generous 30% of your total system cost.
This includes expenses for:
- Solar panels
- Inverters
- Wiring
- Installation labor
- Permits and fees
You don’t need to itemize your taxes to claim this credit, and there’s no cap on the amount you can claim.
Can I Still Claim the Solar Tax Credit This Year?
Yes—if your system was installed during the tax year you’re filing for and you haven’t claimed the credit before for this system. You must own (not lease) the system and have it in service by December 31 of the tax year you’re claiming for.
How Do I Claim the Solar Tax Credit?
It’s simpler than you might think. Here’s what you need:
- IRS Form 5695 – This is the residential energy credit form.
- Your total solar system cost – Include invoices, contracts, and receipts.
- Form 1040 – Enter your credit amount on the appropriate line after completing Form 5695.
For a detailed breakdown of both federal and regional programs, check out the top federal and state solar tax incentives you should know about.
What If I Don’t Owe Enough Taxes This Year?
The good news? The unused portion of your credit can roll over to the next tax year. So even if your federal tax liability is lower than your credit, you won’t lose the excess.
State-Specific Incentives Can Stack the Savings
In addition to the federal credit, many states offer local solar incentives that can stack onto your savings. These may include:
- Property tax exemptions
- State tax credits
- Solar renewable energy certificates (SRECs)
- Utility rebates
To take full advantage of these offers, visit this helpful guide on how to take advantage of local and state-specific solar incentives.
Last-Minute Tips for a Smooth Filing Process
1. Gather All Your Documentation
Don’t wait until the last minute to scramble for receipts. Make sure you have:
- Installation contracts
- Proof of payment
- Manufacturer warranties
- Final inspection approvals
2. Double-Check Your Eligibility
If you leased your solar panels, you’re not eligible for the federal tax credit—the leasing company is. Not sure if leasing or buying was best? Compare both in this helpful breakdown of leasing vs. buying solar panels.
3. Use a Solar Calculator for Confidence
Not sure how much your system should have cost or whether you’re claiming the right amount? A tool like this solar calculator can give you a reliable estimate so you file with peace of mind.
How Your Solar System Impacts Your Utility Bill
Many solar owners notice their energy bills drop dramatically—but what does that mean for your long-term finances? Learning more about how solar affects your utility bill can help you understand your return on investment and improve your savings forecast.
Can You File Amendments for Previous Tax Years?
Yes, if you forgot to claim your solar credit in a previous year, you can file an amended return for up to three years back. Just consult a tax advisor or use online tax software that supports amendments.
The Future of the Solar Tax Credit
The federal tax credit is set to decrease after 2032 unless renewed by Congress. So if you’re considering solar in the future, it’s smart to act soon and lock in the current 30% rate.
Conclusion: Don’t Leave Money on the Table
If you’ve already invested in solar—or are on the fence—don’t miss out on one of the best financial incentives available. Filing for your solar tax credit might sound complicated, but with a few documents and the right forms, you’ll be set. Whether you’re claiming for the first time or maximizing state-level benefits, the time to act is now.
FAQs
1. Do I need a professional to file for the solar tax credit?
No, but it can help. Tax software like TurboTax or a licensed tax preparer can guide you through Form 5695.
2. Can renters claim the solar tax credit?
Only homeowners who purchased and installed a solar system are eligible.
3. Does the solar tax credit apply to battery storage?
Yes! As of 2023, standalone battery storage systems qualify for the federal credit.
4. How long will it take to get the savings?
You’ll see it when you receive your tax return or when your liability is reduced after filing.
5. Are there other incentives besides the federal tax credit?
Absolutely—explore state-specific solar incentives for even more savings opportunities.