How to Claim the Solar Tax Credit
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- Опубліковано 9 лют 2025
- Solar Surge will teach you all about being energy independent and how to set up your home to run off-the-grid during an emergency. We empower families to take control of their energy generation and storage so that they will never be left in the dark without electricity.
In this video, Joe Ordia presents IRS form 5695 for Residential Energy Credits. This allows you to claim the 26% solar tax credit.
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Great breakdown thank you! All other vids are full with confusing info. This explains exactly what the tax credit means
Great Job, you helped me more than I can put into words. The damn tax forms are made too complicated to be computed by even the above average person!!!
Did you get it back?
Thank you. this helped me to understand why I was showing a carry forward amount on my solar credit.
Still a bit foggy, but makes a little more sense. I was told I would be getting big check.
Thank You so much
Thank you for the video, I was kinda freaking out because I owe my solar credit to my solar installers.
Thank you SIR
Thank you for your presentation.
thank you, I was just preparing my taxes and only got x amount of the rebate for 2020 return, and the remaining they say will carry forward. I thought I did something wrong, searched all over, found your video that explains the tax liability. and Boom it clicked. bummer of news for me, I really wanted the full 26% of 44k system now, but the gov't will carry forward the rest of the credits to next year.
Hi Justin. Thanks for the feedback. Please be sure to share this video with others who would benefit from the information here.
Hi, it happened the same thing to me, the bad part about this is that the company that I signed on will require that 26% from me by the end of the month, if not my monthly payment will go up. I wish I would have done more research regarding this return before signing that contract :(
@@priscilarodriguez3917 That's too bad. Solar companies should be transparent about the tax credit being dependent in the individual's personal income tax liability.
My solar company's finance has it set up that after 17 month if the 26% of net is not pd back then the monthly payment would increase.
@@pineapplesquad3651 Yes, that type of loan is very common in the solar industry.
Thanks, very helpful!
Please note that at 1:45 when describing what goes into the the cost of the system line 1 that it is net of any upfront state utility rebates. for example in NY there is a NYSERDA rebate, so if a systems gross cost is $ 22,000 and there is say a $ 2,000 NYSERDA rebate (not state tax credit) the cost of the system for ITC tax credit calculation purposes would then be $ 20,000. (the amount net of any upfront utility rebates) .. Also you often used the word rebates when in fact you were actually referring to tax credits. There is a difference.
Hi Ben and thanks for writing in. Good feedback.
thanks for the info!
Thank you 🤗
Good video. What documentation is required to confirm that the system is operational at the time i do my taxes with my accountant? thanks
You should receive a permission to operate (PTO) letter from the power company. Also, the city/county passed inspection report should do.
@@SolarSurgemany thanks!!
can you please clarify 30 percent federal solar tax credit if its on the total value of net installation cost or minus Renewable Energy Credit ? For example if the installation cost without any incentive is 30 k and then you get energy credit 15K ... is 30 percent calculated on 30 k or 15k for federal tax credit ?
600 likes, i just clicked! Just wanted to point that out! Thanks! lol, i know, just bragging rights I get! 😊 thanks for the info!!!!
Thanks for that!
Does one have to be itemizing to get refund for solar credit? Or is it filed separately?
I got mine for 34k last year so I need to get that reimbursement
One of your sales guy tried to push me into the roof replacement before solar installation. He told me, I can apply the 26% tax credit on the total cost of the roof replacement and a solar installation. Mr. Joe Ordia , what is your statement about that information. I believe that is misleading. Please, prove me I am wrong...
Thanks for this video, actually the 26% Tax credit has been extended to 2022........
Yes that's true. The solar investment tax credit (ITC), which was scheduled to drop from 26% to 22% in 2021, will stay at 26% for two more years.
What do you think about the power wall?
How I add expenses of the power panel ?
how i can claim the credit if transferring ownership and i am getting loan.
also, previous owners kept it for only 10 months.
Thank you so much for explaining this tax credit. Question can I summit this solar tax credit at any time once my panels are installed? Does it have to be attached with my 1040 form on April or can it be submitted after regular tax season by itself?
I completed my 1040 and did not summit my solar tax credit, so was wondering if I could do it now ?
Do you have to have your name on the title of the home to claim this credit?
IS THE amount on line 1the cost before finance right
Yes, that’s correct. This would be your total contract amount before any interest charges.
What qualifies as "doing a solar installation"?
I have been leasing for the last decade. Therefore I don't own any of the equipment and have never qualified for a tax credit.
But I have just purchased new solar equipment and plan to get it installed as soon as possible. This means I qualify for the credit now, correct?
Yes, if you purchase and own the equipment then you are eligible for the tax credit.
@@SolarSurge
Thank you. We spoke on the Zoom as well.
I don't know how I can repay you for your free advice.
I kinda feel bad about it.
I had Solar in 2021 and I didn't claim it last year, is it the same steps if I want to apply for 2022, and do I need to use the old form"2021" or I need to use the latest one?
You need to use the current year form. Just search "IRS form 5695"
Great explanation, but you left out the 1040 part which is equally unintuitive.
Can I claim DIY solar projects.
I spent around 5,000 dollars so far in 2022.
Do I need to itemize every receipt.
All I have to do is print Amazon and Homedepot receipts.
yes absolutely. Keep your receipts.
@@SolarSurge
😃 Thank you
Does the home have to be in your name in order to claim the tax credit if you paid for the solar?
Yes, I believe so. You can find the full details of the program here: programs.dsireusa.org/system/program/detail/1235/residential-renewable-energy-tax-credit
Thx for making this video.. it was quite useful..
Keep up the good work!
My question is : will the IRS CREDIT or REFUND the same amount every year and up to how many years can you claim that credit?
Hi Udeus. My understanding is that this is a one-time credit. How fast you received it is based on your individual tax liability.
@@SolarSurge
I have heard you can claim it up to 3 years...
Any information on that?
What about batteries and generators?
They apply so long as they are all connected together as one integrated renewable energy system.
What needs to happen on page 2? part 2. it looks like you can only get 2000 a year back. Is there a video for part 2 of the document?
It all depends on your individual tax liability. Look at "total tax" line 24 on the form 1040
@@SolarSurge what if you never owe taxes ? Should I stop my job from taking out federal tax with holdings so I can take advantage of the credit? This still makes no sense . Ever year I do taxes I never owe I get money back. I just want to use the credit towards the payment as these sellers are making it the selling point in reducing the cost of the oanels
Do you put the amount paid before or after financial interest?
For example $20,000 for install but after financing it went up to $35,000.
Use the amount before interest.
Any advice on how to claim a Solar Tax Credit for a new construction rental (Airbnb) property? Best that I've been able to find is Form 3468.
I can help you with this - question though, is the solar equipment already built on the property? Because i REALLY hate to break it to you but the IRS will NOT allow you to claim credits on residential investment properties - so i hope you were sold this with the assumption you could claim those credits from whoever sold you it. You have to live there to get it, and if you live there say 3 months, you can only claim 25% of the aggregate credit. If it is already built theres another way to get a tax incentive, but preferably if its not built and you havent paid for the equipment yet theres still a good option if you want the benefits of solar. And btw its form 5695, 3468 is for commercial properties.
Is this a tax credit or tax rebate? Doesn't a tax credit only credit you should you owe federal taxes?
Yes it's a tax credit. If you have already paid in estimated taxes, then your credit will be refunded to you in cash.
Solar residential projects sometimes requires new roof if it is necessary.
My question is if the cost of the roof will be aditional to total cost of project?
IE
Roof $8500
Solar panels instalation $24000
Total $32500
So the tax credit (26%) applies over $32000 or $24000 only?
In the past, I have seen people claim the rebate on the entire amount including the roof. It would be best to ask a tax professional for an official answer.
I got to know from my contractor that I can get depreciation and interest from FED in addition to 26% tax credit. Is that true?
Curious as to what is included in a "solar project." Does it include back up batteries? What about site preparation for ground based panels such as clearing a field?
Yes, all of that would be considered part of the solar project cost.
In a DIY situation, what if in the first year I have the solar panels, and plan to complete the install with inverter in the second year. Can I claim the amount I paid for the panels in the first year, then claim the rest in the second year?
Yes
@@SolarSurge Nice. Thanks for responding :)
Some other guy said it's not rebate but a credit. It means you dont actually get a reimbursement but a credit you can use to pay your other taxes.
is that true?
It's a credit. So, if you have already paid in estimated taxes, you will receive a rebate of this amount. If you owe tax at the end of the year, then this amount would be reduced from your tax bill.
@@SolarSurge so if the HO's never paid taxes (according to them..), is it possible for them not get any of the reimbursement due to not reporting taxes???
How does this apply to Rv's ??
Here's the exact code "A taxpayer may claim a credit for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer."
I bought a house earlier this year and it already have solar panels; however, I want to increase the size of the system. Can I install more panels and still claim the credit?? I cant find the answer anywhere. Thanks!
Yes, absolutely
Come on Joe. Its a tax credit. Not a rebate! Rebate implies it has nothing to do with tax liability. You are better than this man.
Exactly
Thank you bro, well explained, Im still misunderstanding on the tax liability. When you say getting the money back, you mean tax credit that will help pay the tax? sorry, I'm learning this for my parents.
Hi Calvin. It depends on your unique situation. If you're an employee who has taxes automatically deducted from your paycheck, then you would get the money back. If, on the other hand, you have a tax bill to pay at the end of the year, then your taxes due would be reduced by the amount of the solar tax credit.
@@SolarSurge Thank you sir!
Hi, is there any difference in filling the form between paying cash for the solar project and financing? Thanks for the informative video
Financing usually cost more so the credit amount is usually higher.
22% for 2021
The Consolidated Appropriations Act, 2021 extended the 26% tax credit through 2022. It will drop to 22% in 2023 and expire at the end of 2023.
Awesome, thanks for the information
I have read that a business and and can not take the tax credit. Do you know anything about a business taking the credit? I have a rental home I want to put solar on.
You should be able to claim the tax credit as an individual even if the solar is installed on a rental property.
@@SolarSurge Interesting. Do you happen to know any CPAs that know about the solar tax rebate I could contact?
@@lightingnut This is the accountant who did mine. She has solar on her home also. www.marycapulecpa.com/
@@SolarSurge Thank you for the info. I will contact her.
@@SolarSurge Hey there, I have sent 2 emails to her and no response. One bounced back and the other was a form on her page. Any help would be great.
how about if you have llc No w2 can you still claim the 26%
Yes. This would credit against your total tax liability. The profit from the LCC should pass through as business income on your personal tax return.
Is qualification for federal solar energy ITC tied to roof irradiance in any way?
no, not at all. It just has to do with the project cost and your personal tax liability
Great video! Which is a better strategy to currently change my withholdings to exempt. So I don't have any taxes taken out per pay period or leave my withholdings the same which is I claim 0. I'm torn because when I hear that the tax credit is only applied to a liability. I'm usually caught up by the end of the year not owing and receiving money back. Or does that amount I already paid throughout the year 🤔 get the tax credit equivalent causing me to get a refund?
Sorry for the long rey 😁
Hi Robert. I'm not a tax professional, but I would say to leave your withholding the way it is now and apply for the credit at the end of the year. That you there's no chance you get hit with an unexpected tax bill.
Can you only claim the tax rebate for the year you install and 1 year later? Or can you continue to claim that credit until you get to the total 26% of the cost?
You have up to 5 years to use the full 26%
Hey Joe nice video question I had my solar system since 5/3/2019, I didnt know about the solar tax credit I was wondering can I claim for solar tax credit for 2019
That's a question for your accountant. I would think so.
One thing you did not explain. What is your tax liability? Is it before all deductions, or after deductions and the amount of tax you actually pay the IRS?
It is the "total tax" line 24 from IRS form 1040.
If I get solar panels this year but I don't have any liabilities when I do my taxes next year can I still claim the 26% when I do my taxes in 2024?
Yes, you can carry the credit forward up to 5 years.
So to receive the full 26% I would need to have paid at least that same amount to receive the full rebate?
Correct. Any extra rebate that you don't received would then carry forward to the next year.
When you say Tax Liability, Let’s say I paid 9,000 in taxes and I usually see about $2000 in a refund from year to year. If my ITC of 26% is 17,000; Does this mean I get a refund of $9,000 this year and next year can get $8000??
In this case your tax liability is 7k since you received 2k back on the 9k you paid to the government for the year. Your eligible to use 7k of the 17k tax credit. leaving a balance of 10k to use within 4 more years since you have five total years to use the tax credit.
26% rebate on the panels that they added an 18% tariff to. Thanks US government!
I'm leary of what sales reps say about how these "tax credits" work. They make it sound so easy. We are retired and average about a total of $8000 in federal taxes to be withheld from our pensions and small IRA disbursements. When we file we usually get back about $500 after claiming the standard deductions. Meaning we leave about $7500 on the table. So my solar rep shows on his proposal for my solar estimate we'd be eligible for a $16,000 tax credit. So I know I don't have the taxes to get the $16K so my plan is to take about $35K from our IRA, and have 25% deducted in federal tax (about $8750) thereby increasing the total amount of federal taxes paid to about $16,750. So if my ITC is less than what I have paid in taxes I'd get the FULL $16,000 as estimated on my proposal?? I can't get a straight answer. We can't afford any errors. The cash left about $22K will be our down payment and we'd be counting on all the "credits" to pay off the balance of the loan. Am I on the right track with my plan.
My solar company told me you only get the 26% credit towards the equipment and nothing towards the labor.
That's not true. You claim the 26% on the entire contract amount.
@@SolarSurge thanks for the reply, I will bring this to their attention.
@@SolarSurge what if they don't pay taxes.. I mean like if they've never payed taxes. Is it possible for them to only claim the 26% the following year and maybe only get a 3rd of it..
We've been getting a lot of conflicting information about this topic. Is this amount refunded to you if you have already paid into your full federal tax amount- meaning does the government cut you a check for the credit amount? Or can it only be received as a credit against your liability, meaning you need to decrease your federal withholdings to build a liability that matches the credit amount so you owe $6500 that zeros out your $6500 credit?
Great question. I've been seeking the same question answered.
I noticed this question was not answered and this in my opinion is one of the best questions asked
The tax credit is classified as a non-refundable tax credit. Think of the tax credit as an IRS gift card. The tax credit is first going to show up on schedule 3 and then the amount on schedule 3 line 7 will be carried over to the 1040 line 20 to reduce your tax (line 16) to arrive at your new "total tax" line 24. In the end it will either increase your refund or reduce the amount that you owe the government all depending on how much how much you had with held throughout the year. If you change your with holding to a lesser amount (meaning you are pocketing more of your income throughout the year) it will have the same effect of getting a larger refund at the end of the year due to the tax credit. here is a simplified example .. let's say if you didn't go solar and your total tax was $ 10,000 and you had $ 12,000 in with holdings you would get a refund of $ 2,000 ( $12,000 with holdings -$ 10,000 tax owed) . Lets say you went solar and the tax credit was $ 6,000 your new total tax after applying your tax credit (think gift card) would only be $ 4,000 (10,000-6,000). again if your with holdings were $ 12,000 and your new total tax was now only $ 4,000 your new refund amount would be $ 8,000. That's $ 6,000 greater than what it would have been with the solar tax credit. In this case it was a dollar for dollar increase in you refund... Let's say you opted not to have as much with held from your paycheck and at the end of the year your with holding was only $ 2,000 (meaning you pocked $ 10,000 more throughout the year instead of giving it to uncle sam as a down payment on your taxes). If you didn't go solar and your total tax was again $ 10,000 but you only had $ 2,000 in with holdings you would be looking at a tax bill of $ 8,000.. ($2,000 with holding - $ 10,000 tax owed) If you went solar like the example above and your tax credit was again $ 6,000 your new tax bill at the end of the year would only be $ 2,000. ($ 2,000 with holding - $ 4,000 "New tax owed by applying the tax credit"). In this case it is a $ for $ reduction of what you would have had to pay uncle sam. so again in summary the tax credit will either increase your refund or reduce the amount of the check you have to write the government. It's the same $ for $ benefit in the end.. Keep in mind that in both of these examples the Tax (line 16) more commonly referred to as your tax liability was $ 10,000 which was greater than your tax credit. Since this was the case you were able to use the entire $ 6,000 of tax credit that year. IF your tax liability was less than your tax credit then only the amount of of the tax credit up to the tax liability could be used in this years return. any amount not used could be rolled over to the next year. (again think of a gift card. if your gift card was greater than your purchase the remaining amount stays on your gift card until your next purchase). Without making this more complicated keep in mind that there may be other "non refundable credits" that will be applied first to your Tax (line 16) before the solar tax credit is applied. These will show up in the calculation of schedule 3 in arriving at line 7 of schedule 3. The most common non refundable tax credit that will be taken first used to be the child tax non refundable credit. Supposedly in 2021 the child tax credit will be completely refundable and no longer effect the solar non refundable tax credit. I'm not an accountant or tax professional so please verify this information with them.. I hope this helps clarify things a bit.
The number-one misleading statement he made what is that it is a federal rebate it is not a federal rebate it is a credit that you will never see a penny of if you do not have a tax liability (you owe Uncle Sam money when you file your taxes) and even if you receive a return (Uncle Sam owes you money when you file your taxes) when you file your taxes. If you receive a return when you file your taxes you will be wasting your time filling out the 5695 tax form because it would just sit there collecting you never owe Uncle Sam any money so the credit never get used.
Rebate or credit?
Credit
so basically, the amount we paid in taxes is what goes in line 14?
Its the "total tax" from line 24 of your form 1040 tax return
So, I knew leasing the system would cost me the tax break, but what if I leased the system and then paid the loan off prior to the end of the year???
If you pay off the lease and then take ownership of the system, then you should be able to claim the tax credit. Please double check this with your tax professional.
Just don't buy a system on a payment plan. The interest alone will eat your rebate and all your electric bill savings. If you install it yourself you can make out decent tho.
How? The rate right now is 1.99%
Some ppl are saying rebate others are saying credit which is the truth?
Credit
@@SolarSurge so when a seller is saying we will get a federal check to go towards the payment that’s a load of crap then?
@@AndyseousOdyssey No, the tax credit is legit. If you have taxes automatically withheld from your paychecks, then you will get a check back from the IRS when you file your tax return.
@@SolarSurge I have a niece that got solar last year and when she did your taxes she did not receive huge refund as advertised . Why would this happen? And she said she never owes taxes because of holdings from work. How can she request that money if it’s there are credit? For this reason I’m holding off on solar so far I keep hearing ppl don’t get all of the money or none at all.
Stop using the term rebate. You’re not getting a rebate. Stop lying to the people it’s a credit. So if at the end of the year when you claim your taxes if you don’t have to pay them at the end of the year than this incentive does not apply to you. Stop letting these people lie to you
Be careful with the word, "rebate", it is a credit.
That's correct. Investment Tax Credit.
This is a one time tax credit. You only get the money back when you owe taxes to the Feds and you have 20 years to do it.
So we don’t get a check that can go towards the cost of the solar payment? That’s what these salesmen are trying to sell us on . I knew it was bs