Federal Solar Tax Credit: How Does it Work? – EnergySage Blog

You claim the investment tax credit for solar when you file your yearly federal tax return. If you work with an accountant, make sure to let them know you’ve installed solar on your property in the past year. If you file your own taxes, you can use EnergySage’s step-by-step guide for how to claim the solar ITC. You’ll need to fill out IRS Form 5695 and other tax forms to ensure you receive your tax credit.

Here’s how to claim the ITC in 2024:

1. Determine if you’re eligible: You must own your solar energy system to qualify for the federal solar tax credit. If you lease your system, you can’t claim the ITC. You also need to have a tax bill in order to receive your federal solar tax credit, so make sure you have enough tax liability to qualify this year, otherwise you have to roll your credit over to the following year.
2. Complete IRS Form 5695: You can use the EnergySage guide for filling out 5695 if you’re filing your taxes yourself. Otherwise, make sure you have all of the supporting documentation from your solar installation ready to go for your accountant to file Form 5695 for you.
3. Add to Schedule 3 and Form 1040: Once you’ve completed IRS Form 5695, you’ll need to use some of that information to fill out Schedule 3, which allows you to claim both nonrefundable credits (like the ITC) as well as refundable credits. Once you’ve also filled out Schedule 3, you’ll need to fill out Form 1040, which is the principal form you use to file your tax return.

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