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118. How to Explain Tax Benefits of Solar Like a PRO! - Brady Slack
58 Plays5 years ago
What are Tax Credits? How do you explain Tax Benefits to the home owners so they can take advantage of it and remove misconceptions about Tax Credits. An added value of a Solar company is being able to not just close deals but explain thoroughly the benefits of Tax Credits to home owners. Educate them about tax liability and their tax claims and eventually, this will help you gain their TRUST.
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Transcript
Introduction to the Solarpreneur Podcast
00:00:03
Speaker
Welcome to the Solarpreneur Podcast, where we teach you to take your solar business to the next level.
00:00:08
Speaker
My name is Taylor Armstrong.
00:00:10
Speaker
I went from $50 in my bank account and struggling for groceries to closing 150 deals in a year and cracking the code on why sales reps fell.
00:00:19
Speaker
I teach you how to avoid the mistakes I made and bring in the top solar dogs of the industry to let you in on the secrets of generating more leads, falling up like a pro, and closing more deals.
00:00:31
Speaker
What is a Solarpreneur you might ask?
00:00:33
Speaker
A Solarpreneur is a new breed of Solar Pro that is willing to do whatever it takes to achieve mastery and you are about to become one.
00:00:43
Speaker
What's going on, solarpreneurs?
00:00:44
Speaker
Taylor Armstrong back here with another episode.
00:00:47
Speaker
And I am stoked today because we're doing something a little bit different we've actually never done before.
Understanding Solar Tax Credits: Introduction
00:00:52
Speaker
And that is we're going to talk about, for some people might be the boring stuff, but in our industry should be exciting stuff because we're going to talk about taxes and not only how you should be kind of strategizing taxes yourself, but also how you should be helping homeowners, um,
00:01:10
Speaker
you know, get the tax credit, be able to best explain it to them and just take advantage of it.
00:01:16
Speaker
So we're having a tax expert on today.
Expert Insights: Tax Strategies for Solar Professionals
00:01:19
Speaker
His name is Brady Slack.
00:01:20
Speaker
So Brady, thanks for coming on the show with us here.
00:01:22
Speaker
Yeah.
00:01:25
Speaker
Thanks for having me, Taylor.
00:01:26
Speaker
I appreciate it.
00:01:27
Speaker
Yeah, definitely.
00:01:28
Speaker
So excited to have you on.
00:01:30
Speaker
And the reason why I think more than anything, I was excited to do something different and have a tax expert like yourself on is when I first started in this, I didn't really know anything about this tax credit except for what we heard in trainings.
00:01:47
Speaker
And that was just basically, oh, just go tell homeowners that they're going to get like 10 grand.
00:01:52
Speaker
for going solar from the government.
00:01:54
Speaker
And that was basically the extent of our training.
00:01:57
Speaker
So it was basically just rinse and repeat.
00:01:59
Speaker
We're just going to homeowners like, yeah, you're going to get sent a check for like 10 grand.
00:02:03
Speaker
And they're like, oh, well, what is it?
00:02:05
Speaker
Or how are we going to get it?
00:02:06
Speaker
And I'm like, I don't know, just free money from the government, sign here.
00:02:10
Speaker
And that was basically the extent of the training.
00:02:13
Speaker
And unfortunately, I think that's how it's been with a lot of reps in our industry is they don't have too much knowledge of the tax credits.
00:02:20
Speaker
They don't know how to explain it good.
00:02:24
Speaker
And matter of fact, one of my first sales I got when I started in solar, like four years back was my parents.
00:02:31
Speaker
And yeah, I explained it that same way.
00:02:33
Speaker
I'm like, yeah, you'll get a, you know, tax credit.
00:02:37
Speaker
And then I don't really know what happened.
00:02:38
Speaker
My dad says he never got a tax credit.
00:02:41
Speaker
So I don't know if I explained it to her or did not help him.
00:02:46
Speaker
But I think if more reps had the training that you're giving people and knew how to explain it, and then not only that, but knew how to like,
00:02:52
Speaker
connect you with the actual homeowners, I don't think there would be that kind of discrepancy that we're seeing.
00:02:58
Speaker
And not only that, it's putting a bad taste in people's mouths, I think, because there's new reps that don't know how to explain it, don't know how to help homeowners, are promising them that they're going to get it, and then they're not seeing this tax credit.
00:03:11
Speaker
So Brady, do you want to kind of give us your background and what you do for solar reps, and I guess just kind of how you got to where you are in the
00:03:22
Speaker
and advising people on their taxes?
Common Misunderstandings in Solar Tax Credits
00:03:24
Speaker
Yeah, yeah, of course.
00:03:25
Speaker
Thank you.
00:03:27
Speaker
Yeah, my name is Brady Slack.
00:03:29
Speaker
I'm from Utah.
00:03:30
Speaker
I'm the owner of High Country Finance.
00:03:33
Speaker
We specialize in taxes and accounting for small business owners, self-employed individuals, and especially people in the door-to-door industry.
00:03:42
Speaker
sales for securities, pests, solar, dish, meats, et cetera, et cetera.
00:03:52
Speaker
I have two financial advising partners and a real estate agent who teaches real estate investment courses.
00:03:58
Speaker
And throughout the summer, we spend most of our summer traveling to summer sales teams, teaching guys how to, you know, save and strategize with their money so that they don't have to give it all to Uncle Sam.
00:04:09
Speaker
Right.
00:04:12
Speaker
I came across the solar industry and in kind of a roundabout way, I acquired a client who owns a solar company and, you know, I started to learn more about solar and like what you were saying, Taylor, a lot of times what happens is a rep that kind of explains how they're going to get a credit from the government in a roundabout way.
00:04:31
Speaker
And then,
00:04:32
Speaker
You know, the client comes in to file their taxes, hands me their loan documents, and I have to explain to them that it's not exactly how they were taught, that they would get their money back.
00:04:42
Speaker
And so then, you know, I'm the bad guy and the solar rep's the bad guy.
00:04:47
Speaker
And so as I was going about that, I wanted to make sure that, hey, you know, I want to help solar companies, you know, sell this product that really does benefit our environment and benefits the client.
00:04:59
Speaker
But that way, they create a good taste in their mouth.
00:05:02
Speaker
That leads them to more referrals and more business in the long run.
00:05:07
Speaker
Yeah.
00:05:07
Speaker
I know it's awesome.
00:05:08
Speaker
I mean, yeah, like you said, if we're not explaining it right, then it's hurting the whole industry.
00:05:15
Speaker
That's why there's so much mistrust.
00:05:18
Speaker
I talk to people all the time as I'm out knocking doors that the only reason they haven't gone solar is because, yeah, they heard that their neighbors lied to and didn't get what they were promised.
00:05:29
Speaker
So I think of all those people out there, they'd be easy sells.
00:05:32
Speaker
It wasn't for, you know, stupid stuff like this that is, you know, easily solved one can be a lot better explained.
00:05:39
Speaker
So, yeah, I guess for you, Brady, what are you seeing more than anything?
00:05:44
Speaker
Do you see a common, I guess, theme of what people are explaining wrong?
00:05:49
Speaker
Or is there something, I don't know, that you see more often that maybe reps don't know how to explain right?
00:05:55
Speaker
Or is it kind of a misconception they're giving homeowners?
00:05:59
Speaker
I think there are two things.
Communicating Solar Tax Benefits Effectively
00:06:01
Speaker
One, and you've already kind of touched on one, you know, based on how you were trained when you started to do solar.
00:06:09
Speaker
One is a lot of reps are, they just tell their clients, hey, you're going to get a check for 10 grand.
00:06:16
Speaker
And they can get a check for 10 grand, but it's not necessarily Uncle Sam's going to write him a check.
00:06:23
Speaker
I wish that were the case, but that's not the case.
00:06:25
Speaker
So I think a lot of reps don't explain how that credit works.
00:06:30
Speaker
And I think a lot of it's just because they don't know.
00:06:34
Speaker
Another highlight was, and this is really where I started to
00:06:38
Speaker
figure out that I could help the solar industry was a couple weeks ago there was a Facebook post from a solar guy in a Facebook group message that asked if anyone could explain the solar credits.
00:06:50
Speaker
Now there were over 50 comments on that post, all from other solar professionals, and not one explained the correct information.
00:07:00
Speaker
length of ability to claim the tax credit.
00:07:03
Speaker
And so I figured, God, you know, it's really simple to understand, but a lot of people just don't know about it.
00:07:09
Speaker
So just a lack of knowledge, I think, is what is the main driving factor in this.
00:07:16
Speaker
Yeah, no, I see it all the time, too.
00:07:20
Speaker
So, yeah, I guess what what now kind of how we've switched our training and obviously we I try to do better training for my reps now just based on mistakes I've made and things like that.
00:07:33
Speaker
But basically what I tell homeowners and correct me if I'm wrong, I'm going to, I guess, put myself to the test and see if you would make any corrections.
00:07:41
Speaker
But the way that I'm kind of explaining it now to my customers is basically, hey, so you're going to get a tax credit and the way you get it, it's just based on how much you're paying in taxes.
00:07:52
Speaker
And I usually give them the example.
00:07:54
Speaker
So for example, if you have 10 grand taken out in your taxes during the year, then you're going to be able to get
00:08:02
Speaker
10 grand of it returns when you do, when you file your, file your taxes, or if you usually end up owing, then you're going to owe, you're going to be able to not owe what you typically would owe and then get the difference.
00:08:15
Speaker
So that's kind of how I've been explaining it.
00:08:18
Speaker
So I don't know if say, say you were a solar rep, you're in a home trying to explain it to a homeowner.
00:08:23
Speaker
What's the best way that you would explain it, or I guess recommend people to explain it.
00:08:31
Speaker
So if I were a rep, I would explain it in a way that, you know, I would first explain that by installing solar, you're eligible to receive a tax credit.
00:08:47
Speaker
This credit is a non-refundable credit, which means if you are employed, you're paying in taxes through your paycheck.
00:08:59
Speaker
And this credit is going to offset any tax deficit of which you might owe when you file your taxes.
00:09:08
Speaker
If you normally get a refund, you can go exempt on some paychecks, knowing that this credit is going to offset those taxes owed.
00:09:20
Speaker
Okay.
00:09:22
Speaker
I like that.
00:09:24
Speaker
Okay.
00:09:24
Speaker
Okay.
00:09:25
Speaker
yeah i like that a lot um and then if they're say they're like self-employed or you know they're 1099s like us and then they're not uh having taxes taken out so in that case what they would typically owe that tax credit is going to offset that right what they would typically yep correct okay another i another example that i um
00:09:50
Speaker
I give sometimes for people, especially if they have kids, is I compare it to like the child, like the tax credit they get when they have a kid.
Comparing Solar Tax Credits with Other Credits
00:09:59
Speaker
Is that a fair comparison or is that pretty much the same?
00:10:04
Speaker
They're both tax credits, right?
00:10:05
Speaker
When you have a kid and then you're getting solar?
00:10:09
Speaker
So kind of.
00:10:11
Speaker
They're both tax credits.
00:10:13
Speaker
However, among all the tax credits, they're either refundable or non-refundable.
00:10:19
Speaker
If it's a refundable tax credit, like the child care or dependent care credit, like when you have a child, when you have a child, the government is going to give you $2,000 per child, qualifying child or dependent.
00:10:34
Speaker
So if you normally get a refund and you have a child in a year, you're going to get an additional $2,000 in a refund.
00:10:42
Speaker
If you normally owe taxes, then you're going to get a credit on your tax bill for $2,000 per dependent.
00:10:52
Speaker
Other credits are non-refundable credits.
00:10:55
Speaker
And what that means is if you owe taxes, that is going to eat up your tax liability before any refundable credits apply.
00:11:07
Speaker
So, for example, the solar credit, both solar credits, the residential energy credit and the business investment tax credit,
00:11:16
Speaker
are non-refundable tax credits.
00:11:18
Speaker
So if you have a client or a customer who normally owes money, let's say they install a solar system that costs them $10,000, you know, in 2020, they're going to get a tax credit for $2,600 because the tax credit is 26% of the total cost of their solar system.
00:11:39
Speaker
Let's say they normally owe two grand,
00:11:43
Speaker
they are going to not owe taxes because 2,000 of their credit is going to be used in the current tax year.
00:11:53
Speaker
And then $600 is going to be carried forward until that credit is used up or 20 years comes.
00:12:03
Speaker
Okay.
00:12:04
Speaker
Does that make sense?
00:12:07
Speaker
I think so.
00:12:07
Speaker
So you're saying basically the child tax credit, they're going to get
00:12:13
Speaker
no matter what, but the solar tax credit they're only going to get if they have that amount of tax liability.
00:12:19
Speaker
Is that what I'm understanding?
00:12:20
Speaker
Yeah, that's exactly what I'm saying.
00:12:23
Speaker
So the importance of connecting with the taxed individual or a tax professional and what we have done by contracting with solar companies is helping their clients create tax liabilities.
00:12:37
Speaker
Okay.
00:12:38
Speaker
Meaning,
00:12:39
Speaker
We do extensive reviews into pay stubs, profit and loss statements, financials with your clients to determine if they can change their withholdings or go exempt in their paycheck, knowing that the tax solar credit is going to make it so that they don't owe those taxes.
00:13:01
Speaker
Gotcha.
00:13:03
Speaker
Okay.
00:13:03
Speaker
And then another thing that's, um,
00:13:08
Speaker
Yeah, I've heard that I don't, I guess I don't know the exact amount of time, but is there a limit of time that they can like carry over that tax credit?
00:13:17
Speaker
Like say they can't get it all in the first year.
00:13:20
Speaker
Is there a set amount of time that they need to be able to get it?
00:13:23
Speaker
Do you know the answer to that?
Non-Taxable Income and Solar Tax Credits
00:13:26
Speaker
Yeah, absolutely.
00:13:26
Speaker
So with these tax credits, if we can actually use those tax credits on a one year look back basis.
00:13:35
Speaker
So let's say for example, your client self-employed and owed taxes in the previous year, we can actually apply that credit to the previous tax year by amending those tax returns and including that credit to offset that liability.
00:13:50
Speaker
Or you have a 20 year carry forward period, meaning you have
00:13:55
Speaker
20 years to use that credit up.
00:13:58
Speaker
Okay, cool.
00:14:00
Speaker
So from the sounds of that, there's probably, I mean, if you look at it 20 years, there's probably very few people that aren't able to get this credit over 20 years, I would imagine, right?
00:14:12
Speaker
Absolutely.
00:14:13
Speaker
And if, and if you have a tax analysis done on most of your clients, the benefit of doing that is these clients are able to get more money in their paychecks and not have to worry about owing more in taxes when they file their taxes, when they install solar, because the credit is just going to eliminate any of that liability.
00:14:34
Speaker
That's awesome.
00:14:35
Speaker
So are you able to get it even for someone that's just on like social security or like these people that typically we, um,
00:14:42
Speaker
you know, typically I tell people, oh, you probably won't get this credit if I hear that they're just living on social security.
00:14:49
Speaker
But have you been able to help people even like that, that let's say they have a very low income, they're not, yeah, paying much in taxes at all?
00:14:58
Speaker
At that point, is it just you stretch it out over a super long period of time or what do you do with those people?
00:15:04
Speaker
Yeah, really the only people that don't benefit from the solar tax credits are individuals who have a non-taxable source of income.
00:15:14
Speaker
You know, if they're only living off social security or if they're living off of an annuity or, you know, even some sorts of government welfare where it's non-taxable, that's where someone would not benefit for getting solar as far as taxes go.
00:15:34
Speaker
Just because they don't have any taxes they paid in that we could create a liability.
Qualifying for Residential Energy Tax Credits
00:15:40
Speaker
Gotcha.
00:15:40
Speaker
Okay.
00:15:41
Speaker
And then at the time of this episode, for our listeners, we're recording this at the end of what year is it?
00:15:48
Speaker
2020, I guess.
00:15:50
Speaker
So as we know, the tax credit, federal tax credit here in the U.S. is going down to 22% this next year.
00:15:56
Speaker
And so that brings me to another question for you, Brady.
00:16:01
Speaker
Yeah.
00:16:03
Speaker
When people get solar, we're making the big, big push.
00:16:06
Speaker
And for us, it's kind of good because we say, oh, we're trying to get people 26% tax credit.
00:16:11
Speaker
So you need to sign up before the end of the year.
00:16:15
Speaker
But from what I'm understanding, in order to get the 26% tax credit this year, they have to have the system actually installed on their home.
00:16:24
Speaker
Is that right?
00:16:25
Speaker
Or is there any like, I don't know, science behind that?
00:16:28
Speaker
That's correct if they're claiming the residential energy tax credit.
00:16:32
Speaker
Yeah, but the solar system has to be installed.
00:16:36
Speaker
Okay.
00:16:37
Speaker
And do you know specifically, does it have to be, like, approved to operate and everything, or is it just installed up there?
00:16:44
Speaker
Installed.
00:16:45
Speaker
Okay.
00:16:47
Speaker
Gotcha.
00:16:48
Speaker
Yeah, because that's another thing I've heard.
00:16:51
Speaker
We had a rep actually in a previous company I was working at is –
00:16:58
Speaker
Beginning of this year, he was obviously tax credit was 26%.
00:17:01
Speaker
It had already gone down, but he was making a big push before tax season of this year.
00:17:08
Speaker
And he was closing a ton of deals and we're like, wow, man, you're crushing it.
00:17:12
Speaker
What are you doing out there?
00:17:14
Speaker
And he told us his big secret in one of the meetings.
00:17:17
Speaker
He's like, oh, well, I'm just, it's a tax season isn't until like February.
00:17:22
Speaker
So I'm just telling people that they have a month to get the 30% tax credit.
00:17:28
Speaker
We're like, dude, it's already 2020.
00:17:30
Speaker
Like 30% isn't a thing anymore.
00:17:34
Speaker
That's long gone.
00:17:36
Speaker
Yeah, he was closing deals galore.
00:17:38
Speaker
But yeah, we had some upset customers when they found out they're getting 26%.
00:17:45
Speaker
I see it.
00:17:46
Speaker
Yeah, but yeah, stuff like that.
00:17:48
Speaker
Obviously, that needs to be trained.
00:17:50
Speaker
We need to make sure reps have a better understanding of, you know, the deadlines and stuff like that.
00:17:56
Speaker
Because, yeah, for a time, I actually thought it was just a signed contract, too, that we needed.
00:18:01
Speaker
So I think last year, I was actually telling my people that, oh, if you sign up in December, yeah, we won't get it installed this year.
00:18:08
Speaker
But since we signed the contract, you're still going to get –
00:18:11
Speaker
and the full 30%, but yeah, obviously that's not the case, right?
00:18:17
Speaker
Yeah, so, and that was, I guess that to jump ahead, I guess, so that brings me to a next point too is, yeah, if they're claiming the residential energy tax credit, yeah, the solar system does have to be installed.
00:18:32
Speaker
Now, there is, like I said, there's two tax credits as far as solar goes.
00:18:39
Speaker
One is the residential energy tax credit and one is the business investment tax credit.
00:18:45
Speaker
Different sections of the IRS code, but with the business investment tax credit, depending on what system a customer gets set up with, they can actually claim the business investment tax credit to depreciate the cost of their solar system and deduct any related expenses
00:19:08
Speaker
but that credit, their solar system just has to have construction started to be able to claim that credit in that current tax year.
00:19:16
Speaker
So like some of those clients would be able to qualify for that tax credit.
00:19:19
Speaker
And even though their solar system might not get installed until January or February next year, they can still claim that tax credit, receive a 20%, 26% tax credit on the cost of that solar system.
00:19:33
Speaker
Oh, wow.
00:19:34
Speaker
That's cool.
00:19:35
Speaker
So yeah, I didn't know about,
00:19:37
Speaker
That credit until yesterday, Brady actually did a training for our team here.
00:19:42
Speaker
And he talked a little bit about that.
00:19:45
Speaker
I, I missed most of that training doing some recruiting stuff.
00:19:48
Speaker
So I'm actually taking advantage of the podcast here to ask the questions.
00:19:53
Speaker
that didn't get to ask them.
00:19:55
Speaker
But yes, can you, so can you tell us a little bit more about this other tax credit?
00:19:59
Speaker
Cause I hadn't even heard about it.
00:20:00
Speaker
And I guess what it, what are the amounts for it?
00:20:04
Speaker
And is there an expiration date for this one or how exactly do you help homeowners get this other one you're talking about?
00:20:11
Speaker
Yeah.
Exploring Business Investment Tax Credits
00:20:12
Speaker
So by being able to claim the business investment tax credit is about how we look at the agreement a client enters into
00:20:21
Speaker
when they install their solar system.
00:20:24
Speaker
There are a couple requirements that needed to be met in order for a client to be able to claim the business investment tax credit, such as a bi-directional or two-way net metering system has to be installed.
00:20:36
Speaker
They have to enter into a net metering agreement or interconnection agreement with their utility company.
00:20:42
Speaker
I think there's one that's called a PPC or a PPA that does not qualify.
00:20:47
Speaker
But as long
00:20:50
Speaker
PPA is that what it is a PPA?
00:20:52
Speaker
As long as your client enters into an NMA or an ICA and gets a bi-directional meter set up, what they're actually agreeing to in that NMA or ICA is that they're selling their electricity to the utility company in exchange for bill credits or bill rebates, right?
00:21:11
Speaker
If you look at it, those bill credits and bill rebates could actually be taxed.
00:21:17
Speaker
In fact, there are bills that have been tried to be passed that actually are trying to tax individuals on that solar credit, have that be reported as income.
00:21:29
Speaker
So the IRS's intention to tax that bill credit is very obvious.
00:21:34
Speaker
And by looking at it that way, that means that your solar system then becomes a business asset in the production of these bill credits.
00:21:43
Speaker
So the timeline for these credits, they're both non-refundable credits, the business investment tax credit and the residential tax credits.
00:21:51
Speaker
They're both diminishing tax credits, 30% 2019, 26% 2020, and then 22% 2021.
00:21:54
Speaker
They both have the same one-year look back, 20-year carry forward periods.
00:21:56
Speaker
However, as the tax law stands right now,
00:22:10
Speaker
after 2021, even if you get solar installed and no changes are made to the tax law, you still are eligible to receive a 10% tax credit.
00:22:23
Speaker
So as it looks right now, your clients, if they install a bi-directional metering system and sign up through an NMA or ICA, they can still get a 10% tax credit.
00:22:35
Speaker
How that works is we just file a different form on the tax return.
00:22:40
Speaker
And then what we do is they are eligible to depreciate the cost of their solar system less 50% of the depreciable amount.
00:22:50
Speaker
So essentially in 2019, 85%.
00:22:52
Speaker
In 2020, 87%.
00:22:52
Speaker
And then 89% in 2021 of their solar costs.
00:23:04
Speaker
along with any other expenses that go along with their solar system.
00:23:11
Speaker
Some energy efficient upgrades, maybe even some roofing upgrades to accommodate the solar system.
00:23:17
Speaker
And all of that is going to offset the difference in what they used to pay in their utility bill versus what they're paying now.
00:23:24
Speaker
For most homeowners, that's, you know, 50 to 100 dollars.
00:23:29
Speaker
Okay.
00:23:31
Speaker
And then this is, so I know there's like the commercial tax credit.
00:23:36
Speaker
So is this like the same kind of the same thing you're talking about is like the commercial tax credit?
00:23:41
Speaker
Yeah.
00:23:43
Speaker
If you install solar on a commercial building or in a solar farm, they're also going to claim the business investment tax credit.
00:23:51
Speaker
And the key to being able to do this is looking at the agreement as a business agreement and recognizing that I am receiving a financial gain in the form of bill credits or bill deductions, you know, to be able to claim this credit.
00:24:08
Speaker
Okay.
00:24:09
Speaker
Yeah, that's awesome.
00:24:11
Speaker
That's something I never heard of.
00:24:12
Speaker
So I think our listeners probably learned something new too, if you hadn't heard of that.
00:24:19
Speaker
And so can you give us like an example, Brady?
Financial Benefits of Tax Credits and Depreciation
00:24:22
Speaker
Say someone puts up like a $30,000 system, they're going to get the tax credit.
00:24:26
Speaker
We'll save it 22% for, I guess, whatever the math is on that.
00:24:32
Speaker
But then this other tax credit, this other like business credit you're talking about, what would they expect to get?
00:24:39
Speaker
for that or I know you're talking about right enough depreciation what would that look like for them oh yeah sorry just to make sure I understood what you wanted give the comparison between an individual that's able to claim this with the business investment tax credit and how that's going to affect them is that right
00:25:00
Speaker
Yeah, I was just asking if you could give us an example for like a $30,000 system.
00:25:04
Speaker
Say a homeowner puts it up there, they're going to get, let's say the 22% tax credit.
00:25:10
Speaker
And then counting this other one, what would they expect to get?
00:25:14
Speaker
And I guess the benefits over time with the depreciation stuff you're talking about too.
00:25:20
Speaker
So I'll use the 26% tax bracket because this even applies to a lot of everyone's clients who have installed solar systems this year or are starting construction before the end of the year, right?
00:25:31
Speaker
So even I can help your clients even this year claim this credit and appreciation.
00:25:37
Speaker
So I'll use an example from this year, okay?
00:25:39
Speaker
2020.
00:25:39
Speaker
Tax credit is still 26% and I'm going to do the math just so I don't fudge any numbers.
00:25:46
Speaker
So they're going to have a non-refundable tax credit of $7,800, right?
00:25:50
Speaker
That's 26% of $30,000.
00:25:54
Speaker
That credit, again, like I said, is non-refundable.
00:25:57
Speaker
So we have to create a tax liability, whether that's they're self-employed and that's going to offset some of the taxes they owe.
00:26:05
Speaker
We look at the previous year's tax return to see if they owed or if they're employed, we go exempt on the last two months of their paychecks.
00:26:12
Speaker
Okay.
00:26:13
Speaker
Okay.
00:26:14
Speaker
then whatever's leftovers carry forward.
00:26:17
Speaker
Now as far as depreciation goes, we take 7800 and divide it by two, that's $3,900, so 50% of the tax credit.
00:26:28
Speaker
They're eligible to depreciate the cost of the solar system less 50% of the allowable depreciation, so $30,000 minus $3,900
00:26:41
Speaker
they're able to depreciate over a five-year period $26,100, which roughly will give them a loss on their tax return to offset their taxable income of about five grand.
00:26:58
Speaker
Okay.
00:27:00
Speaker
So essentially we're talking the 7,600 of the regular tax credit plus five grand.
00:27:06
Speaker
So bottom line, it'd be like 12,600, I guess is kind of the total.
00:27:15
Speaker
Essentially.
00:27:15
Speaker
Yeah.
00:27:15
Speaker
The loss is going to be for every dollar, you know, the average tax rate in America is 24%.
00:27:21
Speaker
So for the average dollar in a loss, they're going to save,
00:27:26
Speaker
24%.
00:27:26
Speaker
So dollar to dollar value, they're going to save off their depreciation, $1,200 a year in taxes.
00:27:38
Speaker
Wow.
00:27:39
Speaker
Okay.
00:27:40
Speaker
So 1,200 for five years is what you said.
00:27:42
Speaker
Exactly.
00:27:44
Speaker
Or, you know, a total tax savings of $6,200 give or take.
00:27:50
Speaker
Okay.
00:27:52
Speaker
Wow.
00:27:52
Speaker
That's not including the $7,800 in the tax credit.
00:27:59
Speaker
Okay.
00:28:00
Speaker
And so that typically take like every year for the next five years, it's going to be the 1200 that they're kind of getting back from that.
00:28:08
Speaker
So this one isn't necessarily a one-time thing.
00:28:11
Speaker
It's for the next five years, they're going to get like 1200.
00:28:15
Speaker
Okay.
00:28:15
Speaker
Gotcha.
00:28:17
Speaker
Okay.
00:28:17
Speaker
Makes sense.
00:28:19
Speaker
Cool.
00:28:19
Speaker
Well, yeah, so this, when I first heard about this, yeah, kind of blew my mind.
00:28:25
Speaker
I'm like, okay, I never knew.
00:28:26
Speaker
I just thought there's the regular tax credit, but now Brady's bringing up this tax magic and tax sorcery, able to pull money out where I didn't even know there was, you know, other tax benefits or other, you know, ways to get more money back from it.
00:28:43
Speaker
So it's really cool what you're doing, Brady.
00:28:45
Speaker
And I know you're doing trainings for, like you said, lots of solar cells teams, lots of door-to-door cells reps.
00:28:53
Speaker
where you kind of teach some of these strategies.
00:28:55
Speaker
And then what we talked about in a little bit in the meeting with our team yesterday is how you actually help homeowners that the companies work with just to be able to strategize and actually get these credits you're talking about.
Brady's Tax Credit Analysis Service
00:29:10
Speaker
So is that something you're doing now with a lot of companies is kind of like offering it to the actual homeowners they're working with?
00:29:17
Speaker
Yeah, I've contracted with a couple solar companies as of right now.
00:29:24
Speaker
Absolutely willing to do more for whoever's interested.
00:29:27
Speaker
Where your solar clients for a $400 fee receive a solar tax analysis and consultation.
00:29:37
Speaker
Or like I mentioned before, we review pay stubs, you know, profit and loss statements if they're self-employed to determine what their tax liability is going to be and see if we need to create a tax liability.
00:29:50
Speaker
And then that fee also includes filing the one year's worth of tax returns for them.
00:29:57
Speaker
That's awesome.
00:29:59
Speaker
And all of that's provided over Zoom or in-person if, like I said, we're in Utah.
00:30:07
Speaker
contracting also to help your closers or your sales associates kind of give a better idea to how they can present these tax credits so their clients understand the benefit of these.
00:30:20
Speaker
And then again, it just provides that added value between you and an actual tax professional who's providing this information to bridge the gap so that there are no questions or bad intentions or misunderstandings.
00:30:34
Speaker
That's awesome.
00:30:35
Speaker
Love that.
00:30:35
Speaker
And what's cool about this is for most people, obviously we can kind of choose what we're selling the systems at and, you know, get the commissions.
00:30:45
Speaker
So I think what's really cool about this is it gives you kind of an edge.
00:30:49
Speaker
If that's something you're offering kind of as the package with the solar, especially if you have clients that are concerned about if they're going to be able to get the full tax credit or have tons of questions.
00:31:00
Speaker
Then I think for a lot of sales reps, I'm going to be like, look, we're going to include a free tax analysis.
00:31:06
Speaker
We're going to actually have them file your taxes and be able to get you this credit.
00:31:10
Speaker
Plus, you know, the depreciation stuff and bring out that.
00:31:15
Speaker
And, and then what a lot of reps could do is just, yeah, have that come out of the commission.
00:31:20
Speaker
You pay for it just because kind of an added bonus for the customer.
00:31:25
Speaker
Then they're happier.
00:31:26
Speaker
Brady's able to get them the full credits, help them take advantage of everything.
00:31:31
Speaker
And I think it really could be something that, you know, sets your company apart from, you know, from other companies.
00:31:38
Speaker
Is that kind of what you're seeing, Brady?
00:31:39
Speaker
Have you been able to do that for...
00:31:41
Speaker
Yeah, and really how it's been set up is there's typically a charge, either a tax or a finance charge in the cost of setting up their solar.
00:31:49
Speaker
So really the client is the one paying for this, whether they finance it or pay for it outright.
00:31:55
Speaker
You can come out of necessarily a commission check from your rep.
00:31:58
Speaker
This is something that the client pays for in their loan.
00:32:02
Speaker
And then upon doing the tax return or the tax analysis, I invoice the solar company for that $400.
00:32:09
Speaker
which really the client is paying for anyway.
00:32:11
Speaker
So again, it's nothing out of the solar company's pocket.
00:32:15
Speaker
It's a great added benefit for the solar company to be able to provide that tax side of how the solar credits work.
00:32:24
Speaker
Yeah.
00:32:25
Speaker
And no, I think it's, again, something that can set people apart, especially if people say they've looked into multiple companies and
00:32:32
Speaker
They haven't heard about some of these tax, you know, advantages, tax strategies.
Building Trust in the Solar Industry
00:32:37
Speaker
You're saying, hey, Mr. Homeowner.
00:32:39
Speaker
Yeah, I know you're looking into XYZ company.
00:32:42
Speaker
We're going to give you.
00:32:43
Speaker
Yeah, we're going to give you the same price, but we're going to actually give you the tax strategies and we're going to help you get more back in your taxes.
00:32:51
Speaker
And then maybe that's what helps you get that extra deal, too.
00:32:54
Speaker
So, um, yeah, so I love what you're doing, Brady training, uh, reps, and then most importantly, helping us just keep, um, hopefully honesty in this industry and, um, more transparency because obviously here in California, um,
00:33:10
Speaker
You probably know this, but they came out with a whole guide that homeowners actually have to sign before they can even have solar put up.
00:33:17
Speaker
It's called the Consumer Protection Guide.
00:33:19
Speaker
And it's a 20-page document just basically because of the fact that people have been lied to.
00:33:25
Speaker
So it's a 20-page document that homeowners have to initial just going over the facts of solar and tax credit and stuff like that.
00:33:34
Speaker
So if people knew all this stuff and were transparent, then I don't think they would have that.
00:33:40
Speaker
I don't think California would have came out with that document.
00:33:42
Speaker
Absolutely.
00:33:44
Speaker
Yeah.
00:33:45
Speaker
So awesome stuff.
00:33:46
Speaker
And so Brady, for people that want to hear more about what you're doing and possibly set up something like this in their cells or their companies, where can they get in touch with you and reach out with you?
Contact Information and Conclusion
00:33:58
Speaker
Yeah.
00:33:58
Speaker
So they can find me on Facebook, either at high country finance or just my personal page, Brady Slack.
00:34:06
Speaker
They can visit my website, high country finance.com.
00:34:10
Speaker
Or give me a call at 801-696-7618.
00:34:12
Speaker
Okay.
00:34:17
Speaker
Awesome.
00:34:17
Speaker
Well, hopefully we have people blowing up your phone.
00:34:20
Speaker
Hopefully you get your 20 calls tomorrow, but I know a lot of, a lot of nuggets you dropped there.
00:34:25
Speaker
So for our listeners, definitely go learn the facts about the tax credit, reach out to Brady.
00:34:31
Speaker
And I know he's happy to come give your team a training and, you know, answer more of your questions.
00:34:37
Speaker
And running short on time here, Brady, but any final tips or I guess words of wisdom you want to share with our solar pros that are listening to this podcast?
00:34:47
Speaker
No, I just, I'm happy to help.
00:34:49
Speaker
And I'm very thankful that you had me on this podcast and yeah, reach out and go ahead and ask me questions, whether it's for your reps or for your clients, I'm more than willing to help.
00:34:58
Speaker
So, and I know we'd love to come and meet you guys and bring you lunch and talk for a little bit.
00:35:04
Speaker
Awesome.
00:35:05
Speaker
I appreciate it, Brady.
00:35:06
Speaker
And we'll have to have you back another time to go over maybe some personal tax strategies for door-to-door people and sales reps.
00:35:15
Speaker
But I know we kind of focus on just the tax credit and talking about homeowners.
00:35:20
Speaker
So I'll be back another time for that.
00:35:21
Speaker
But I appreciate the wisdom you dropped and we'll be in touch.
00:35:25
Speaker
So thanks again, Brady.
00:35:26
Speaker
Thank you, Taylor.
00:35:27
Speaker
I appreciate it.
00:35:30
Speaker
Thanks so much for tuning into today's episode.
00:35:32
Speaker
I know when I got into the industry, I had almost no resources like this.
00:35:36
Speaker
So I hope this show is helping you get the success you deserve.
00:35:40
Speaker
If you found value from anything in this episode today, think about someone who can benefit so you and I can help people fulfill their potential.
00:35:48
Speaker
Zig Ziglar said if you help enough people get what they want, you will get what you want.
00:35:53
Speaker
So I promise by sharing this it will help you grow and improve.
00:35:57
Speaker
The value bombs on today's show will take you one step closer to success, but it's always to the degree that you apply and execute the principles.
00:36:05
Speaker
I've spent the last few years interviewing the top solar experts and helping other reps and businesses discover their potential.
00:36:12
Speaker
If you want more help achieving your goals, then I put together an exclusive video training on three hacks that helped me close multiple deals a week while knocking less than 10 hours.
00:36:22
Speaker
And who doesn't want that?
00:36:24
Speaker
So go check it out at webclass.solarpreneurs.com.
00:36:27
Speaker
Once again, that's webclass.solarpreneurs.com to get exclusive access to the training and take your skills to the next level.