Accounting can seem like a minefield full of complicated lingo and confusing rules, especially if you are busy with your job and family or running a business. #AskDave is here to answer your pressing accounting and tax questions — and hopefully make the whole endeavor seem less complicated.

Dave Wendell, of Elite Accounting, built a full-service accounting firm while managing another business and earning a bachelor's in accounting from DeVry University and an MBA from Keller Graduate school of management. Based in downtown Twin Falls, he's committed to helping his clients reach their personal and professional goals.

In this installment of #AskDave, he tackles a question from someone who just had solar panels installed: I have to pay a lump sum I get from the tax incentive I sold, and I have to do it within 18 months. But I'm not sure how to go about it. Any ideas?

Congratulations on the purchase of your new solar panels. They are sure to help reduce the overall impact of that monthly power bill.

The form that you will need during tax time would be form 5695 Residential Energy Credit. When it comes to the credit that is received for the solar panels you are allowed 26% credit (if installed in 2021) of the total purchase price of the panels. The IRS credit has been extended from its original schedule. Congress passed an act that extended the 26% tax credit from 2020 only to 2021 and 2022 and dropping to 22% in 2023.

This allows homeowners to install solar on their homes while taking advantage of the credit for a few extra years. This means that if you owe taxes that credit can offset what you owe. The tax credit is non-refundable, meaning that you will not be able to increase your refund by using the credit, only reduce what you owe.

The credit for solar panels can be carried back one year and carried forward up to twenty years per IRS code 48. The IRS also allows for other credits on your home while making it energy efficient. Make sure to contact your tax advisor for more details regarding your tax credit.

Dave has owned and operated Elite Accounting since 2008, adding the payroll service in 2011 and tax services in 2011. He's also an IRS Enrolled Agent, so he can help businesses and individuals with more serious tax matters, too. If you'd like to set up a consultation to learn how he can help you or your business, simply call 208-825-1641 or fill out this form.

In addition, Dave loves answering questions! Click here to submit to #AskDave and he just might answer your question in a future article.