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IRS Home Energy Credits
Now through the end of 2010, the new U.S. Energy Tax Credit allows
homeowners up to $1,500 in federal tax savings for purchasing products
that meet the new energy-efficiency requirements.
Replace your aging windows, add insulation, or fix a worn roof, and
you might get a tidy credit come tax time. To encourage greater
energy efficiency, homeowners can recoup 30% of the cost, up to $1,500,
for making any of these qualifying upgrades during 2009 or 2010. You claim
the credit for the year in which you complete the project.
The improvements must be made to your existing primary residence to be
eligible. You can include only the cost of materials. Upon your request
Mountaintop Construction LLC will give you a receipt that itemizes
materials and labor.
Keep in mind that the $1,500 cap applies to all of the projects combined
for both years. You can’t claim a $1,500 credit for new windows in 2009
and a separate $1,500 credit for a new furnace in 2010. $5,000 in
materials
would max out the credit. Please note that not all ENERGY STAR qualified
products qualify for a tax credit.
How Tax Credits Work
A tax credit is usually more valuable than a tax deduction because
the credit lowers your tax bill—or increases your refund—dollar for
dollar. Think of it this way: A $1,500 deduction will save $363 on taxes
owed for a married couple filing jointly with an adjusted gross income
of $100,000. That same couple would save the full $1,500 with a $1,500
tax credit. Married filing separately taxpayers may be able to take
separate $1,500 tax credits.
Residential energy tax credits do have limits. The IRS considers the
credits “non-refundable,” which means you can’t claim more in credits
than you paid out in federal income taxes. You may be able to carry
forward some of your surplus uncapped tax credits to future years.
Requirements
- Purchase and install qualifying products beginning January1, 2009 through December 31, 2010, and meet all other criteria outlined in the federal tax code.
- Retain sales receipts and all NFRC labels, ENERGY STAR labels, and the Manufacturer's Certificate Statement and keep on file with all of your other tax documents.
- Claim the tax credit associated with your qualifying purchase on your federal income tax return for the 2009 and the 2010 tax years.
Click these weblinks for more information
Energy Incentives for Individuals
Energy Provisions of the ARRA
Expanded Recovery Act Credits
ENERGY STAR Federal Tax Credits
2010 Energy Star Requirements