Solar and Other Energy Credit Information
Who qualifies for a federal solar tax credit?
You need to owe federal taxes to be able to get a credit. The credit reduces the amount of tax you'll have to pay. If you do not have a tax liability, the credit cannot help you for the year of the tax return, but it can be carried over to the next year when you might have a tax liability. (You can also apply some of the tax credit for the tax year the solar was installed and carry some to the next tax year.)
The solar must have been installed on your main or a secondary home. It cannot be applied to rental property.
What is a tax credit?
A tax credit reduces your tax liability by a certain dollar amount. It is NOT a deduction. A deduction takes money off your taxable income and varies depending on how much you make.
This information is a summary of what credits can be applied. For exact details, click on the links to review the forms.
These are the things you need to get these credits. (The first set of bullets are draft versions that the IRS is still working on for 2015. The following set of bullets are the 2014 complete forms.)
- Form 1040 for 2015
- Form 5695 for 2015
- All receipts for materials, labor, structures, and anything that was necessary to complete the project.
- A calculating device.
Details for Form 5695
- Qualified solar electric property costs
- Qualified solar water heating peoperty costs
- Qualified small wind energy property costs
- Qualified geothermal heat pump property costs
- Qualified fuel cell property
Form 5695 for Residential Energy Credits is used to calculate the energy credit. Part 1 Residential Energy Efficient Property Credit (page 1) (up to 30%) is for:
- Insulation to reduce heat loss or gain
- Exterior doors that meet Energy Star requirements
- Metal or asphalt roof that meet Energy Star requirements
- Exterior windows and skylights that meet Energy Star requirements
- Energy-efficient building property
- Natural gas, propane, or oil furnace or hot water boiler (and advanced main air circulating fan used in any of these)
Part 2 Nonbusiness Energy Property Credit (page 2) (up to 10% for some items and a dollar limit for others) is for qualified energy efficiency improvements that are expected to last at least 5 years for:
Details for Form 1040
The totals from Form 5695 on page 1 (Line 15) and 2 (Line 30) are carried to Line 53 on Form 1040 (or Line 50 on Form 1040NR).