The 30% tax-credit for solar is one of the most beloved features of solar power for homes and businesses. And because of the way our tax filing system works, December is a great time to take advantage of tax-credits.
Most people, who pay attention to their finances, tend to look for deductions in December, to see if they can shave a bit more off of their taxes. Lots of charitable-giving happens in December. Certainly because the holiday spirit engenders generosity, but also to take advantage of the tax-deduction for a portion of their donations to charity.
Tax-credits, on the other hand, are dollar-for dollar credits…meaning each dollar of the credit reduces your tax liability by one dollar.
The reason the timing is so smart is twofold:
- First, when you contract with a solar company in December, you spend money in December only to have it quickly returned when you file your taxes a month or two later. That makes for the shortest “float time” for your money.
- Secondly, because the IRS guidance on the solar tax credit for businesses allows you to claim the credit with only a contract and deposit, it’s feasible that you could receive your refund even before the installers make it to your facility to install!
So, if you’ve been thinking about solar, now is a terrific time to let the system – and the tax code – work for you.
The above is not intended as legal advice. It based on a layman's reading of the tax code. You should check with a qualified tax-preparer about how solar tax credits will apply to your particular situation.
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