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  • 1.  Solar ITC Practicality

    Posted 01-05-2022 10:18 AM
    Hello all,

    My name is Devin and I am a new member to the group. My solar panel installation is scheduled for next Wednesday and I am trying to determine the best path forward to claiming the ITC for 2022. I generally either get a small refund or pay a small amount come tax time and need help figuring out how to increase my tax liability (to be offset by the ITC).

    Does anyone have any experience modifying their allowances to reduce their taxes during the year? I plan to consult a tax professional but wanted to check in here first to see any success stories. Thanks in advance!

    Devin Poulin

  • 2.  RE: Solar ITC Practicality

    ASES Life Member
    Posted 01-06-2022 10:24 AM
    You could reduce your federal tax withholding by the amount (or a bit more) that you expect to be credited from your install.  It's been awhile since I've done this but I believe you use a W-4 form.

    Mike Curran
    Retired from (dare I say it?) Fossil Plant Mgt.

  • 3.  RE: Solar ITC Practicality

    Posted 01-06-2022 10:25 AM
    Some of this depends on what your objective is and what your income tax situation is.  You can use it to get a big refund or you could reduce you withholding so that you get more cash in your pocket during the year.

    The tax credit is not refundable (ie, you can only claim it up to the amount of tax you paid), however you can carry forward to a future year tax credits you were unable to claim in the year the system was installed.

    Claiming the ITC is straightforward.  Form 5695 is used and you get to claim 26% of the total investment in 2022.

    There are standard tables that are used to calculate exemptions based on your filing status and projected income for the year that can help you adjust your withholding.

    John Gillispie

  • 4.  RE: Solar ITC Practicality

    Posted 01-06-2022 06:35 PM
    Here are a couple of ideas to help with IRS form 5695.  1. The tax credit will apply to your entire tax obligation for the year, not just the amount of your refund.  2. If your annual tax obligation is less than your tax credit there may be two options.  Previously it was possible to carry the remaining tax credit forward, to use the following year.  A tax advisor can be consulted to confirm that carrying the credit forward is still allowed.  The other approach is to increase your tax obligation.  This can be done by converting a traditional IRA to a Roth IRA.  The solar equipment for my zero net energy home is extensive; I used both methods.

    Stu Besnoff
    Alpine Solar Heat and Hot Water, LLC