Summary: The IRS is offering incentives to make energy efficient improvements to your home. But these come with strings and caveats. Be sure that what you are planning will qualify before you commit to the expenditure.
If you want to improve your home's energy efficiency, the federal government wants to help. Uncle Sam does offer some tax credits to improve your home's energy efficiency, but there are some strings attached to them. Still, it's a tax credit, which may benefit you.
One of the first things you need to know is that these credits can only total 30% of your expenditures and can include (for existing homes) metal roots, windows and doors, asphalt roads, insulation, heating and air-conditioning systems, ventilation, biomass stoves, and non-solar water heaters; the credit is up for up to $1500 over a two-year period, for the tax years 2009 and 2010. The credit does not apply to each year. Each adult owner of the home also CANNOT qualify for a separate tax credit each, unless they file their tax returns separately; for example, if they are married or living together and file separate tax returns, they may receive two such $1500 tax credits, in some cases.
Besides that particular tax credit, there are also unlimited and longer-term tax credits totaling 30% of the cost, with no upper limit and good through the year 2016 for new construction and existing homes. This tax credit applies to solar water heaters, geothermal heat pumps, solar panels, small wind energy systems, and fuel cells. The tax credit for fuel cells is limited to $500 for every half kilowatt of power capacity.
Installation costs are only allowed for doors, windows, insulation and roofs.
The tax credit can only be claimed for up to what you owe in taxes. That means, if you all after deductions have been accounted for, the credit cannot be claimed. If you don't owe "enough" taxes to claim the credit, you can't carry over the credit unless you qualify for longer-term items as described above.
However, you CAN claim both credits, the $1500 credit and the unlimited credit, as long as you satisfy both credits' requirements.
Next, you will need to ensure that what you are doing qualifies for the credit. It's best to check with the company (or the manufacturer's web site) to ensure that they can provide a "Manufacturer's Certification Statement." The MCS is a signed statement that comes from the manufacturer, which certifies that the product is qualified for this tax credit. As with anything involving the IRS, be sure to save all receipts and the MCS, just in case the IRS requests them.
Form 5695 should be included when you file your taxes, and it should be the latest draft; the energy tax credit appears on line 52 in this form.
If you think this may be a good way to go to help offset the costs of home improvements for energy efficiency with your own home, visit the Energy Star website for more information. Check back often here, because the managers on the website seem to be keeping information current and answering people's questions. You can find it at:
http://www.energystar.gov/index.cfm?c=tax_credits.tx_index
You might also want to read the IRS rules carefully and check with your tax advisor/accountant, if you have one.
If you want to improve your home's energy efficiency, the federal government wants to help. Uncle Sam does offer some tax credits to improve your home's energy efficiency, but there are some strings attached to them. Still, it's a tax credit, which may benefit you.
One of the first things you need to know is that these credits can only total 30% of your expenditures and can include (for existing homes) metal roots, windows and doors, asphalt roads, insulation, heating and air-conditioning systems, ventilation, biomass stoves, and non-solar water heaters; the credit is up for up to $1500 over a two-year period, for the tax years 2009 and 2010. The credit does not apply to each year. Each adult owner of the home also CANNOT qualify for a separate tax credit each, unless they file their tax returns separately; for example, if they are married or living together and file separate tax returns, they may receive two such $1500 tax credits, in some cases.
Besides that particular tax credit, there are also unlimited and longer-term tax credits totaling 30% of the cost, with no upper limit and good through the year 2016 for new construction and existing homes. This tax credit applies to solar water heaters, geothermal heat pumps, solar panels, small wind energy systems, and fuel cells. The tax credit for fuel cells is limited to $500 for every half kilowatt of power capacity.
Installation costs are only allowed for doors, windows, insulation and roofs.
The tax credit can only be claimed for up to what you owe in taxes. That means, if you all after deductions have been accounted for, the credit cannot be claimed. If you don't owe "enough" taxes to claim the credit, you can't carry over the credit unless you qualify for longer-term items as described above.
However, you CAN claim both credits, the $1500 credit and the unlimited credit, as long as you satisfy both credits' requirements.
Next, you will need to ensure that what you are doing qualifies for the credit. It's best to check with the company (or the manufacturer's web site) to ensure that they can provide a "Manufacturer's Certification Statement." The MCS is a signed statement that comes from the manufacturer, which certifies that the product is qualified for this tax credit. As with anything involving the IRS, be sure to save all receipts and the MCS, just in case the IRS requests them.
Form 5695 should be included when you file your taxes, and it should be the latest draft; the energy tax credit appears on line 52 in this form.
If you think this may be a good way to go to help offset the costs of home improvements for energy efficiency with your own home, visit the Energy Star website for more information. Check back often here, because the managers on the website seem to be keeping information current and answering people's questions. You can find it at:
http://www.energystar.gov/index.cfm?c=tax_credits.tx_index
You might also want to read the IRS rules carefully and check with your tax advisor/accountant, if you have one.
About the Author:
About the author: J. Dyess has been specializing in the Texas Electricity market segment for many years and written articles on Texas Electric prices.
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