Energy Tax Credits
You may wondering how to claim energy tax credits? Many taxpayers are asking this question because some of the federal energy tax credits are due to expire.
Please keep in mind the technical rules that apply to each energy tax credit item. For example, these energy tax credit items only apply to an existing home or principal residence, not to a rental home or new construction. Here is a list of items that had to be installed by December 31, 2010.
- Biomass Stoves
- Heating, Ventilating, Air Conditioning (HVAC)
- Roofs (Metal & Asphalt)
- Water Heaters (non-solar)
- Windows and Doors
The energy tax credit items mentioned must be placed in service by December 31, 2010 which means they must be usable and operational by that date. Don’t make the mistake of running out and making the purchase just before the expiration date to claim the energy tax credit. Sorry, it doesn’t work that way.
Amount of Energy Tax Credit
Let’s say you had a new metal roof installed and it’s usable and operational before December 31, 2010. How much money can you deduct from your income tax return? The energy tax credit for the above mentioned items is 30% of costs up to $1,500.
Now we have one more technicality to consider. Not all metal roofs qualify for the energy tax credit and a simple list of qualifying metal roofs does not exist. You have to do the research first about qualifying metal roofs for the energy tax credit. I know this sounds like a lot of work and I’m getting exhausted just writing about it, but the credit will be worth the extra effort it takes.
Not all ENERGY STAR items qualify, but they do provide a PDF of some of the qualifying metal roofs which goes beyond the scope of this article. This list is quite long and you will have many choices. Don’t think you can get away with a roof coating because they are not eligible for the energy tax credit.
Rentals do not Qualify for the Energy Tax Credit
If you missed out on the energy tax credit for the above mentioned items, you still have time for the next group of items listed below.
- Geothermal Heat Pumps
- Small Wind Turbines (residential)
- Solar Energy Systems
The three energy tax credit items mentioned above can be claimed not only for existing homes, but also for new construction. These three items can claim the energy tax credit not only for a principal residence, but also a second home. Rentals never qualify for the energy tax credit. The energy tax credit is worth 30% of costs with no upper limit and it expires on December 31, 2016.
How do I Apply for the Energy Tax Credit?
You will need to file the IRS Form 5695 with the receipt and the Manufacturer’s Certification Statement. Make sure you save copies of all documents for your personal tax records.
Tax Preparation Made Easy
I know it doesn’t seem possible, but claiming tax credits can be quick and easy even when it comes to complicated energy tax credits. Over 20 million people used TurboTax Online to prepare and file their taxes with the guarantee of the biggest tax refund possible or least tax owed.
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