When it comes to living greener, many homeowners are taking on the investment of reusable energy sources for their homes. These renewable energy sources include things like geothermal heat pumps, solar panels, and small wind electric systems. As a reward for living a more environmentally-conscious lifestyle, the Federal, State, and Local Governments are offering tax credits, incentives, and rebates to these homeowners.
If you have recently installed a renewable energy system in your home, it’s time to take advantage of the tax incentives that are owed to you. It can seem difficult to figure out where to start as there is much literature online about this process. We’ve decided to combine all the information you need into a few easy-to-follow steps. You can read over these below.
Federal Solar Investment Tax Credit (ITC)
Step 1: Ensure You Are Eligible
Before you attempt to claim a tax credit, you should read over the eligibility requirements. This will ensure you get the most amount of credit that is owed to you. The eligibility requirements can be found at Energy.gov. The Federal Tax Credit is limited to homeowners that installed solar-electric and solar water-heating systems. All other forms of renewable energy sources are not eligible for this type of credit. However, you can still take advantage of other State and Local tax incentives.
Step 2: Fill Out IRS Form 5965
You can grab IRS Form 5965 for Residential Energy Credits there. You need to fully complete this form with the information about the renewable energy system you had installed at your home.
Step 3: Record Your Credit On Your Tax 1040 Or Other Similar Form
In order to receive the tax credit from your new renewable energy source, you need to claim the credit on your regular tax form, such as Form 1040.
These steps will help you to claim the Federal Solar Investment Tax Credit (ITC). This tax credit is equal to 30 percent of the value of your new solar energy system and can only be credited in the year the new system is installed at your residence.
State And Local Tax Credits
There are many other rebates that are offered for those who install a renewable energy source at their residence. There are credits offered at both the State and Local level. The DSIRE website will allow you to search for incentives in your local area. It’s important that you take your time and read over the eligibility requirements of each incentive.
Some states offer different incentive programs for various types of renewable energy sources. In some locations, homeowners may take advantage of practices like net metering, which allows you to get credit on your electric bill by supplying solar power for your neighborhood grid.
If you are still thinking about installing a renewable energy source in your home, there’s really no better time than now. The rebates and tax incentives offered at the Federal, State, and Local level are time sensitive. Most programs expire within the next two years.