General Characteristics of the Residential Solar Tax Credit
There are many residential as well as commercial places that use the sun as their source of energy. Using solar power has always been rewarding. It is an environmentally safe source of energy. You will never run out of using solar energy because the sun is an unlimited resource. You will also have uninterrupted use of solar power because no one controls its supply. You will also say goodbye to the huge power bills that you have to pay when you use other sources of energy that are supplied by power companies. You will be able to save due to the reduced expenses. The only time you spend cash is when purchasing and installing the solar system.
The federal government has also made it interesting to use solar energy by introducing the solar tax credit. This is like being given a reward for conserving the environment. You will only reap the residential solar tax credit after you have bought the panel and installed it but not leased it. Read the following to understand how you can benefit from the federal solar tax credit.
You need to have all the required documents in place. The first step is to fill form 1040 where you will provide your solar information after reaching line 53. You also have to remember that when filling form 1040 from line 53, you will need to use form 5695 as your reference. It is mandatory that form 5695 is submitted together with form 1040 because the worksheet is needed for reference.
There is a lot of vital information you need to know when filling form 1040. Information on the total cost of your residential solar system is mandatory. Information on the use of solar water heating is also required. There are places where you have to provide numerical information in form of percentages and other numbers. For you to be able to fill line 14 on form 1040 correctly, you must have the Residential Energy Efficient Property Worksheet which is found on page four of the instructions for Form 5695.
The worksheet is crucial in establishing if you have a tax liability that is required so that you claim the solar tax credit. You should also know that a low tax liability will mean that you will only claim part of the 30% solar tax credit and claim the rest the following year. Some of the things that determine your tax liability are tax credits like the Health Coverage Tax credit and the Child Tax Credit, among other tax liabilities you may have. The residential solar tax credit is the best incentive for you to own a solar panel.