How does the solar tax credit work and how do I know if I qualify?


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Residential Renewable Solar Energy Credit - continued for 2018-2022

  1. You must have completely installed the system, but it need not yet be operational.
    (in prior years to 2018 it also had to already be working but now in 2018 only need be installed by end of year).
  2. You must be the owner of the system, not the lessee. If leased, the lessor gets the credit.
  3. The credit is "non-refundable" meaning that it applies to any un-paid tax liability, taxes you owe currently, when you file.  So if you have made withholdings and estimated payments in excess of what you owe, the credit is not applied in that year. But see #4 to learn about benefit in future years.
  4. Unused renewable solar tax credits carry-over from year to year, current law at least until 2022, and are available to satisfy futute tax liability.
  5. No maximum credit - meaning based on whatever was the cost of the system installed.
  6. SEE ATTACHED PDF - multipage - and walk through the entire filing process.

Payback on solar panel investment:

  • 30% (or the relevant % as it drops year by year) Federal tax credit, where 30% (or relevant %) of equipment cost and including other costs such as installation.
  • Possible small state tax credit' varies by state - in addition.
  • Solar Renewable Energy Credit "SREC" - credits saleable in auction or to companies to offset their carbon production' typical value $250-275/SREC;  number of SREC dependent on your system size and production efficiency.  Think of shade and weather impacts negatively
  • Possible reduction in electric service charges; if allowed a reversible, possible utility buybacks of production

Payback on investment can be 5 to 8 years for break-even

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Scruffy_Curmudgeon , Firefighter/medic IAFF retired

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