Hot enough for you? As summer starts to heat up, most of us begin to think of ways to keep cool. And you might be wondering about ways to get tax credits and deductions for the cost of doing so.
Although tax credits for the installation of new air conditioning systems expired at the end of 2016, tax credits for the installation of solar systems are still available. The federal solar tax credit lets you to take a credit for 30 percent of the cost of installing a solar energy system to provide energy for your home, and you can deduct that tax credit from your federal income taxes. Any credit that you don’t use during the year of installation can be carried over and offset against future federal taxes. The tax credit does not apply to solar water-heating property for swimming pools or hot tubs. The system doesn’t need to be in connection with a business, since it is available for residential use as well.
But the residential credit will drop over the years so don’t wait too long. It is now available through 2021, though in the later years the tax credit may be limited. For the years 2017, 2018 and 2019, the credit is a full 30%. Wait until 2020 to install your solar panels and you’ll get a credit of 26%. Wait another year and your credit will drop to 22% for 2021, and to zero after that.
You can claim the tax credit on your tax return for the year construction begins, even though it isn’t operational before the end of the year. So as long as you begin the panel installation in 2017, you can use the tax savings this year. In order to get the credit, you must actually own the solar energy system. If you simply lease it from the solar company, then it is not owned by you and you won’t get the credit.
Smart thermostats are another way to help you save money on your energy bill, however the cost cannot be written off on your federal taxes. You may see cost savings in the form of rebates or some other incentives.
Don’t worry about remembering all of these come tax time. TurboTax is up to date on tax laws and will get you the tax deductions and credits you are eligible for based on your answers to simple questions.