TaxOut Mastermind

YOUR QUESTIONS ANSWERED

You’ve probably heard a lot about the Investment Tax Credit (ITC).

Your solar agent, accountant, and realtor all say different things. But how do you know what’s right?

Below, we answer the most frequently asked questions and debunk any misinformation you might have heard about the ITC credit.

How does the ITC credit work?

Put simply, the ITC credit is a non-refundable tax credit that can reduce and/or eliminate the amount of taxes you have to pay to the IRS (also known as your tax liability).For example: if you owe $5,000 in taxes you can apply up to $5,000 of your ITC credit to eliminate your tax liability to $0.

How long does my credit last?

You have up to 10 years to claim the ITC credit in full. For example: If you owe $5,000 in taxes per year and you have an ITC credit of $20,000 it will take you 4 years to claim your credit in full.

Who qualifies for the ITC credit?

To qualify for the ITC credit, you must:Be a homeowner and have a solar system installed on your property. Have taxable income. Have tax liability. File form 5695 together with your tax return.

What is taxable income?

There are 2 types of income in the US: non-taxable income and taxable income.

1. Non-taxable income is income that you don't have to pay taxes on. For example: Social Security Retirement, VA Benefits, Child Support, Government Assistance, etc.

2. Taxable Income is income that you earn, and that you must pay taxes on. For example: Wages & Payroll, Independent Contractor, Self-Employed, Unemployment, etc.

What happens if I don't qualify for the ITC credit?

You have a couple of options. With the right strategy, we can help you either transfer the tax credit or claim it during the year by going tax-exempt at work.

Click here to schedule a call with one of our ITC Tax Experts to learn more.

Can the ITC credit be transferred?

Yes, but this can only be done at the time of purchase. The person who will be claiming the credit must be included as a co-signer or the main person on the solar contract.

For help with this, click here to schedule a call with one of our ITC Tax Experts.

What is the difference between a refundable credit & a non-refundable credit?

A refundable credit is when you get money back from the IRS. On the other hand, a non-refundable credit eliminates your taxes, but the IRS does not send you money back for it.

Will I get all of my ITC credit in year 1?

On average, it takes 2-7 years to receive the full ITC credit. Less than 1% of taxpayers will receive the ITC credit in full in year 1. You have up to 10 years to claim your credit.

What can I do to receive the ITC credit faster?

You have two options. You can either:

1. Get the credit when you file your tax return, or

2. If you are a W2 employee, you can go tax-exempt at work and get the credit during the year.

Does the ITC credit work differently for Independent Contractors (1099)?

Yes. As a 1099 filer, you pay 2 types of taxes at the end of the year: the Self-Employment Tax and Income Tax. The ITC credit can only eliminate income tax. You will still need to pay the Self-Employment Tax.

Can I claim this credit if I'm retired?

It depends. If you are fully retired and only receive social security benefits, you do not qualify for the ITC credit. However, if you receive any additional taxable income - for example: rental income, pensions, or income from part-time employment - you may qualify.

Click here to schedule a call with one of our ITC Tax Experts to learn more.