Top 5 Benefits of Installing Solar Panels – 2021

It’s 2021 and there are many reasons to go solar. We’ve compiled a list of the top 5 benefits driving homeowners to install solar panels on their homes in 2021. You can watch the video or read about it below.

Watch this video on YouTube.

Solar Investment Tax Credit

There is a big tax credit for going solar in 2021. It’s worth 26% of the purchase price. The value of the tax credit could easily be between $5,000 and $15,000. The government seems to be providing this incentive to go solar, because it believes enabling homeowners to power their owner homes, is better than subsiding more gas or coal plants.
If you’re interested in the solar investment tax credit (“ITC’) and how it might be helpful to you, we encourage you to learn more. We’ve got a great resource here.

The ITC is a big benefit of installing solar panels on your home in 2021.

High Utility Bills

In 202, a lot of us spent a lot of time at home. And unfortunately, that meant we spent a lot of time using a lot of energy. Which means our energy bills went way up! Many people have started looking for ways to improve their homes and lower their utility bills.And a lot of those homeowners are turning to solar to produce the power they need, so they don’t have to pay so much to their electric company.

Savings – Solar as an Investment

The biggest reason people will go solar in 2021 is savings. Both short-term and long term savings.

In the short-term, solar systems may save people money on a monthly basis. This is made possible with SolarLoans. SolarLoans are loans designed specifically for solar.
In the long-term, solar can save 10’s of thousands of dollars. It’s the real driver for most homeowners’ decisions to install solar. Homeowners can save 20, 30, 40, and sometimes over 50 thousand dollars by harvesting their own energy from the sun. Instead of buying it from a utility.
This essentially makes installing solar panels on your home an investment in 2021.

Solar is Here and Ready

A lot of people have thought, “I’ll get solar when solar is ‘ready’ or when the price is low.” The great news is, in 2021, solar is here. The prices have already come way down. The systems are very well engineered. The solar industry has many professional installers. And they are ready to make homes into state-of-the-art solar homes.
Solar and the solar industry, is ready to help homeowners to take advantage of the free energy from the sun.

Solar Energy is Better Energy

Another reason people are feeling good about going solar, is that solar energy is just better energy. What would you rather do?
Would you rather have pay less for clean energy harvested by your home,
OR,
Would you rather pay more for dirty power from your utility?
It’s a pretty easy choice for most people. Doing a good thing while spending less money is a no brainer.

What Next?

So now you have read about the top 5 benefits of installing solar, you might be interested in learning more, or even getting solar installed on your home. If so, great!.
While we don’t sell solar, we can help you with the first part, learning more.
First, if you have any questions, feel free to ask them in the comments below.
Second, keep reading and explore this site or our YouTube Channel. We’ll be coming out with more info that you may find useful and interesting.
Finally, feel free to share this with someone who might be interested in learning.

Solar Investment Tax Credit (ITC) – 2021

Solar Investment Tax Credit

The solar Investment Tax Credit or ITC for short is the primary way the US Government has helped homeowners adopt solar.  As the name suggests the ITC is a Tax Credit for homeowners investing in solar energy systems for their homes (note: there is a commercial tax credit as well).   The value of solar investment tax credit recently increased for 2021 & 2022, and is now worth 26% of the total value of the purchased solar system.  A typical tax credit can be worth $6k – $15k (or more).

The math works like this. 

Tax Credit Value = .26 X Total System Price

If the system price is $30k, the tax credit would be $7,800  (.26 * $30,000)

What is a Tax Credit?

A tax credit is a dollar-for-dollar reduction in the amount of income tax you would otherwise owe.  For example, claiming a $1,000 federal tax credit reduces your federal income taxes due by $1,000.1 The amount of taxes you normally owe at the end of the year, is also known as your tax liability.  

While the tax credit can be super valuable, a tax credit is not a rebate.  It is not a guaranteed check for a certain amount.

How do I Apply for the Solar Tax Credit

Paying taxes is a lot better when you don’t owe as muc

When you file your 2021 taxes, (and you have had solar installed on your home), you will need to fill out IRS Form 5695.2  You can find the instructions here.3  But you can also consult a tax professional if you need any help. Generally, you’ll need to know the solar system size and cost of the system installed.

How Does the Solar Tax Credit Work

Here are a few examples of how the solar tax credit could work (using some simple math with made up numbers for simplicity).   Each example or scenario is described, and then shown in table format, just in case you have a different learning style.

It is important to note that these are simplified examples and that if you have any questions about your situation, you should seek the counsel of a tax professional.  The examples below are only meant to give you a very basic understanding.

person resting their hand on table
Getting your taxes done!
Photo by Oleg Magni on Pexels.com
Employee – Scenario 1
  • You sit down and do your taxes and find out that your tax liability (how much you owe) is $1,000. 
  • The company you work for collects and pays your taxes all year (also called withholding).  They paid $1,000 on your behalf. 
  • Solar was installed on your home this year and you have a $1,000 Investment Tax Credit. 
  • The $1,000 Tax Credit lowers the amount you owe by $1,000 and now you owe $0. 
  • At this point, you actually owed $0, but your company paid (overpaid) $1,000 on your behalf.
  • The IRS will send you back any money overpaid on your behalf (your refund of $1,000). 

Shown in a Table

Tax Liability$1,000(how much you’d normally owe)
Tax Credit$1,000(the credit reduces how much you owe)
New Tax Liability$ 0(Your Tax Liability minus your Tax Credit)
Withholding$1,000(your money paid to the IRS by your company during the tax yr.)
Refund$1,000*(you get back money overpaid to the IRS. Money paid to the IRS above what was owed)
*In this case, the solar tax credit made your tax liability $0, but your company had collected $1,000. Meaning an extra $1,000 had been collected. You would get that back.
Employee – Scenario 2
  • You sit down and do your taxes and find out that your tax liability (how much you owe) is $1,000. 
  • The company you work for collects and pays your taxes all year (also called withholding).  They paid $1,000 on your behalf. 
  • You had solar installed on your home this year and have a $800 Investment Tax Credit. 
  • The $800 Tax Credit lowers the amount you owe by $800 and now you owe $200. 
  • Since $1,000 of your money has been paid by your company to the IRS, the IRS will send you back any money overpaid on your behalf (your refund of $800). 

Shown in a Table

Tax Liability$1,000(how much you’d normally owe)
Tax Credit$ 800(the credit reduces how much you owe)
New Tax Liability$ 200(Your Tax Liability minus your Tax Credit)
Withholding$1,000(your money paid to IRS by your company during the tax yr.)
Refund$ 800*(you get back money overpaid to IRS. Money paid to IRS above what was owed)
*In this case, you only owed $200, but your company had collected $1,000 from you. Meaning an extra $800 had been collected. You would get that back.
Employee – Scenario 3
  • You sit down and do your taxes and find out that your tax liability (how much you owe) is $1,000. 
  • The company you work for collects and pays your taxes all year (also called withholding).  They paid $1,000 on your behalf. 
  • You had solar installed on your home this year and have a $1,200 Investment Tax Credit. 
  • The $1,200 Tax Credit lowers the amount you owe by $1,000 and now you owe $0.  The tax credit cannot lower your tax liability to less than $0.  (you can ask your tax advisor if you’ll be able to roll-over any unused tax credit).
  • Since $1,000 of your money has been paid by your company to the IRS, the IRS will send you back any money overpaid on your behalf (your refund of $1,000). 

Shown in a Table

Tax Liability$1,000(how much you’d normally owe)
Tax Credit$1,200(the credit reduces how much you owe)
New Tax Liability$ 0*(Your Tax Liability minus your Tax Credit – see notes below)
Withholding$1,000(your money paid to IRS by your company during the tax yr.)
Refund$1,000(you get back money overpaid to IRS – Money paid to IRS above what was owed)
*Your tax liability can’t be less than $0 for the year.
*Talk to your tax professional about the potential to roll over any unused tax credit.
Self Employed – Scenario 4 (very basic example)
  • You sit down and do your taxes and find out that your tax liability (how much you owe) is $1,000. 
  • You have saved $1,000 all year, so you can pay your taxes at the end of the year.
  • Solar was installed on your home this year and have a $1,000 Investment Tax Credit. 
  • The $1,000 Tax Credit lowers the amount you owe by $1,000 and now you owe $0. 
  • Since you do not owe any money, you get to keep the $1,000 you saved, instead of paying it to the IRS.

Shown in a Table

Tax Liability$1,000(how much you’d normally owe)
Tax Credit$1,000(the credit reduces how much you owe)
New Tax Liability$ 0(Your Tax Liability minus your Tax Credit)
Saved$1,000(money you saved during the year)
Keep$1,000*(you get to keep your money)
*In this case, the solar tax credit made your tax liability $0, but your company had collected $1,000. Meaning an extra $1,000 had been collected. You would get that back.

Important

  • It’s very important to remember that a tax credit is not a rebate.
  • It is not a promise of a check from the government.
  • Please consult a tax professional if you need help with your individual taxes.  This is not tax advice.

Interesting?

If you’ve made it this far, you’re probably have a strong interest in solar for your home. If so, feel free to continue learning about solar on this site. We’ll be adding more videos and post soon. In fact, if you have a question we haven’t answered, please ask us. Perhaps we’ll feature your question next.

References:

  1. U.S. Dept of Energy: Guide to Federal Tax Credit for Residential Solar PV
  2. Internal Revenue Service: Form 5695
  3. Internal Revenue Service: Instructions for Form 5695

How Solar Works

If you’ve ever wondered how solar systems work, you’ve come to the right place. This is a basic explanation of how solar works. Check out the video or read below.

Watch this video on YouTube.
The Power of the Sun

When learning about Solar, it’s best to start with the Awesome Power of the Sun and It’s Rays

So how powerful is the Sun? Well it’s more powerful than the Power of Grayskull. But, it’s slightly less powerful than Girl Power. Either way, it’s rays are incredibly strong.

According to the National Renewable Energy Laboratory, the Sun’s rays are so powerful, that in one hour, they deliver enough energy to the Earth, to power us for a year!

That’s a massive amount of energy. So how does this free and abundant energy get used to power the earth?

How we use the sun’s energy

Let’s take a look at us, here in the USA.. in fact let’s look at how we use the sun in Florida.

We happen to use the sun’s rays to get sweet tans. And unfortunately Sunburns. The energy from the sun also powers our weather. Trees Harvest the sun’s free and abundant energy to grow.

We can harvest the Sun too. We can do it when we make our homes, Solar Homes.

Solar Homes, can convert the energy from the sun’s rays into electricity we can use.
So let’s dig a little deeper and take a look at the science. But just the basic science, because we just need a basic understanding.

It all starts with the suns rays, which we see as light.
When the light from the sun hits the array of solar panels on the home, the electron’s in the panels get excited and start to move about.

Now these excited electrons flow in one direction. A flow of electrons is called an electric current or Electricity. To be specific it’s Direct Current or DC.

Now there is one problem, our homes don’t use Direct Current, they use Alternating Current or AC.

So solar homes also have what is called and Inverter. The inverter changes the DC into AC.

But forget all that science stuff. The bottom line is that the abundant free energy from the Sun, can be used to power our homes. And that is something to celebrate.