With federal tax credits being made available to homeowners in the United States, energy saving techniques are becoming more practical and obtainable. Many Americans want to be proactive in helping the environment and to reduce the harm caused daily to its future. As a result, more and more options are now available to conserve resources. To this end, the government has provided federal tax credits, or solar tax credits, to encourage homeowners to make the switch to energy saving equipment.
A core focus of research deals with the conversion of sunlight into solar energy for use in residential properties. This abundant natural resource allows homeowners to reduce their carbon footprint and the effect their energy use has on global warming. The installed equipment consists of items like energy absorbing panels, an inverter and a battery for storing power. The initial investment can be costly, and while that used to deter people, the government began financially compensating homeowners making the upgrade with federal tax credits in 2005.
Both the Energy Policy Act of 2005 and the revised Energy Improvement and Extension Act of 2008 were put into place to bring structure to these financial incentives. Under the Environmental Protection Agency and Department of Energy, the program offers cash back to those that upgrade their property’s traditional utility system to a rooftop photovoltaic system (or solar panels). Such a system can be quite affordable once all incentives are taken advantage of.
There are a number of legal guidelines that must be followed to qualify for solar power federal tax credits. Assistance can only be claimed for the installation, and while the property does not have to be a primary residence, an incentive cannot be applied to rentals. The payer must also owe federal taxes to qualify for the program. The financial return only decreases the amount that is owed. If the rebate exceeds what is owed, the surplus can be utilized on the following year’s filing. Though the financial break can only be received one time, any excess can be carried through 2016. For solar systems installed between 2009 and 2016, homeowners can receive up to 30 percent of the overall expenses back with no limit. For equipment acquired prior to 2009, the previously set $2000 maximum incentive still applies.
To file for federal tax credits, an IRS Form 5695 must be submitted along with the standard annual return. With this form, the amount the homeowner is entitled to will be calculated based on the system’s cost as well as any solar rebates or other government assistance received. Speaking with a knowledgeable professional in the residential solar industry can be beneficial, as they can help homeowners out with current regulations and any steps they must take to proceed.
While the initial price tag of utilizing the sun’s natural energy can be expensive, the assistance the government provides through federal tax credits makes it a more affordable option for many homeowners. In the long run, the positive return will be substantial in the form of lower utility costs and reduced environmental impact.