Solar Technology Tax Credits Still Available for 2020

Dec 4, 2020 | Newsletter

Certain energy-efficient home improvements can cut your energy bills and save you money at tax time. While many of these tax credits expired at the end of 2016, tax credits for residential and non-business energy-efficient solar technologies do not expire until December 31, 2021. Here are some key facts that you should know about these tax credits:

Residential Energy Efficient Property Credit

  • This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
  • Qualified equipment includes solar hot water heaters and solar electric equipment placed into service on or after January 1, 2006, and on or before December 31, 2021.
  • There is no maximum credit for systems placed in service after 2008.
  • The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
  • If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
  • At least half the energy used to heat the dwelling’s water must be from solar in order for the solar water-heating property expenditures to be eligible.
  • Solar water-heating equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
  • The home must be in the U.S. It does not have to be your main home.
  • Use Form 5695, Residential Energy Credits, to claim the credit.

Equipment costs such as assembling or installing original systems, on-site labor costs, and costs related to wiring or piping solar technology systems are considered final when the installation is complete. For a new home, the placed-in-service date is the occupancy date.

The maximum allowable credit varies by the type of technology:

Solar-electric property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022

Solar water-heating property

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022

If you would like more information about this topic please contact the office today.

Named to PA Business Central’s Top 100 Organizations

Named to PA Business Central’s Top 100 Organizations

Wessel & Company is proud to announce that they have been named among Pennsylvania Business Central’s Top 100 Organizations for 2024. The list was created by Pennsylvania Business Central’s 23-county coverage area and Wessel & Company were selected for their...

Retirement Saving Options for Your Small Business

Retirement Saving Options for Your Small Business

If you’re looking for a retirement plan for yourself and your employees but worried about the financial commitment and administrative burdens involved, there are some options to consider. One possibility is a Simplified Employee Pension (SEP). This plan, which comes...

Hiring? How to Benefit from the Work Opportunity Tax Credit

Hiring? How to Benefit from the Work Opportunity Tax Credit

If you’re a business owner or manager who is seeking to hire, you should be aware of the details of a valuable tax credit for hiring individuals from one or more targeted groups. Employers can qualify for the Work Opportunity Tax Credit (WOTC), which is worth as much...

Have You Recently Reviewed Your Life Insurance Needs?

Have You Recently Reviewed Your Life Insurance Needs?

At one time, life insurance played a much larger part in an estate plan than it does now. Why? Families would often use life insurance payouts to pay estate taxes. But with the federal gift and estate tax exemption at $13.61 million for 2024, far fewer families...