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IRS Home Energy Credits for 2011
Now through the end of 2011, the
extended U.S. Energy Tax Credit allows
homeowners up to $500 in federal tax savings for purchasing products
that meet the new energy-efficiency requirements.
Replace your aging windows or doors, add insulation, or fix a worn roof, and
you might get a welcome credit come tax time. To encourage greater
energy efficiency, homeowners can recoup 10% of the cost, up to $500,
for making qualifying upgrades during 2011. Windows are capped at $200. 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. The informal IRS
guidance is that if the component is a critical piece of the product's
energy efficiency then it is included in the cost of materials. Upon your request
Mountaintop Construction LLC will provide you with a statement that
shows the split between cost of material and labor.
Keep in mind that there is a
$500 lifetime limit. If you got over $500 in these
tax credits from 2006-2010, you are not eligible for anything more.
$5,000 in materials at the current 10% rate would
max out the 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 $500 deduction will save approximately $125 on taxes
owed for a married couple filing jointly with an adjusted gross income
of $100,000. That same couple would save the full $500 with a $500
tax credit. Married filing separately taxpayers may be able to take
separate $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
1. Purchase and install qualifying products before January 1, 2012 and meet all other criteria outlined in the federal tax code.
2. Retain sales receipts or invoices (showing split of material and labor) and all NFRC labels, ENERGY STAR labels, and the Manufacturer's Certificate Statement.
3. Keep these documents on file with all of your other tax documents.
4. Claim the tax credit on your federal 2011 income tax return using Form 5695.
Manufacturer's Certificate Statements
Alside
- Manufacturer's Certifcate Statement
Andersen Windows - Manufacturer's Certifcate Statements
Click on these weblinks for additional information
ENERGY STAR Federal Tax Credits
ENERGY STAR FAQ