Solar energy is a valuable part of the energy industry. Without it, there would be very few options for clean, reliable energy. There would be no major competitor to fossil fuels. There would not be a cost-efficient way for people to adopt clean energy. The power of the sun is nearly infinite, and is readily available in most locations, even in foggy or cloudy weather. So plentiful in fact, that it can pay for itself in 7 to 15 years, or 2 to 4 years, if you live in a place that provides good incentives for your solar energy! How do you take advantage of your solar energy? How do you get energy credits?
How do you take advantage of your solar panels? If your solar energy system collects more power than your home uses, the excess from your solar panels goes back into the power grid. This not only means you aren’t paying for the energy your home uses, but that the power company will pay you for the energy your home puts into the power grid. Even the costs of installing solar panels can be claimed as a credit to reduce your tax burden.
These are a few of the ways you can recieve credit for your investment in green energy solutions.
The Residential Energy Efficient Property Credit
The Residential Energy Efficient Property Credit is a tax credit that can be worth up to 30% of the cost of installing a renewable energy source in a home. This credit can be claimed on your income tax returns with the IRS. Unfortunately, this tax credit expired in 2014 but was extended to expire on December 31st, 2016. Thus, acting to claim this credit as soon as possible is advised for making the most out of it, in case the legislation is not further extended.
Claiming an Energy Credit is as easy as filing an IRS tax form, and then claiming the tax credit on your 1040 filing. First, you’ll want to fill out your Form 1040, stopping at line 53, where it says residential energy credits. As it suggests, you’ll be moving to Form 5695, the Residential Energy Credits form. Fill in your name and social security number on the top of the page. Then start with line 1, where you would write down qualified solar electricity costs. Qualified costs include the cost of materials, as well as the cost of labor to prepare, assemble, and install the panels. On the following lines, add other renewable source costs that qualify, and total the costs on line 6. On the next line of the form, calculate 30% of the total, or multiply the total by 0.30.
Now, you’ll fill out the next few lines if you own a fuel cell property, and move onto lines 12 and 13, where you’ll put down any carryforward credit from the previous year. Then you’ll add the numbers from lines 6, 11 and 12. On line 14, you’ll fill in how much in taxes you’ll owe for this year. You’ll fill in line 15, which takes the number from either line 13 or 14, whichever is smaller. Then you’ll subtract what you owe, versus the credit you’ve earned, and provide the carryover for next year’s return on line 16. Once that’s done, you’ll go back to form 1040, and line 53, and write down the number you entered for line 15. You’ve now claimed energy taxes on your income taxes, taking advantage of one of the many benefits of your solar energy sources.
Becoming a Green Energy Producer
Depending on your state and the incentives offered by your utility company, you may also be credited for energy that is collected and sent back to the grid. These on-grid systems are designed to pull power from the grid when your own solar production is not enough to power your home, and send power back into the grid when it is producing more than it needs. This means you’re not only buying less or may be even no power at all, it means that you will receive credit for the excess energy your home produces. To sweeten the pot, more locations are having the option to receive and trade in Solar Renewable Energy Credits — an incentive above and beyond the credits previously discussed that are earned as your home’s solar energy system produces power and can be bought and sold similarly to trading stocks.
If you want to get in on the green energy movement and start earning energy credits, talk to a solar provider like Bob Heinmiller in Orlando to see if your home is ready for residential solar.