Don’t forget the Energy Tax Credit14 Sep
The American Recovery and Reinvestment Act of 2009 extended a bunch of tax incentives that were first started in 2005. What this means to you as a home owner is that you can save up to $1,500 on your income tax bill (or increase your refund by $1,500) if you do some approved energy improvements to your house before next December 31st.
A lot of people are talking about the $8,000 first time home buyer tax credit, but this $1500 credit is open to everyone, not just first time home buyers. A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed.
Some things you can use the tax credit on:
- Air Conditioners
- Insulation
- Furnaces
- Windows / Doors
- Sky Lights
- Roofing
- Water Heaters
- Attic Ventilation
- Solar water heating
- Solar Electricity
- Wind Power
- Geo Thermal
- Sealed Crawl Spaces
To take advantage of this tax credit, you will need to file IRS Form 5695 (Currently in draft form, available by clicking here), and include it with your tax return. The manufacturer of the product you install will need to certify that the product qualifies and you will get a certificate from either their website or the installer that will give you the information you need to file.
You can listen to an IRS Podcast to learn more. (I know, it’s from the IRS, but it’s actually a pretty informative podcast – not what you might expect!)
If you want to ‘Go Green’, the credit it even better – it is 30% of the cost of the energy improvement, with no $1500 limit, so you can save even more.
Add in the utility cost savings of a new air conditioner, or from added insulation, and this can make a real difference for you – save on your electric bill and on your income taxes. The best places I’ve found for more information are:
Federal Governemnt’s Energy Star Website
If you do a Google or Bing search, you will find a lot of marketing information from companies that are selling products that qualify, so be sure to separate the marketing from the facts as you look into this.
Be sure to plan ahead for the best use of the energy savings and the tax credit – could $1500 upfront plus $100 a month in lower electric bills help you build your savings, pay off debt or save for kids’ college education?
