- Days left

How to cash in on energy efficiency tax credits

One of the small pieces of big bailout bill that homeowners can cash in on directly, are energy tax credits offered to reward you for energy saving improvements. As part of the Economic Stabilization Act of 2008 signed into law in October, homeowners have the opportunity to earn up to $500 in one-time credits with upgrades providing in-home comfort, reducing air pollution and delivering long-term energy savings.

Here's how it works:

Purchase and install any combination of qualifying products at your primary residence between January 1 and December 31, 2009, and with the help of IRS Form 5695, purchase receipts and manufacturer certifications (e.g., the Energy Star label for windows), and your tax advisor's guidance, apply for credits.

Also, if you earned up to but claimed less than the similar energy efficiency tax credits offered during the 2006 and 2007 tax years, you'll be able to claim the unused portion in the coming year (once again, consult your tax advisor for details).

So what improvements exactly are covered? Lots! Consider the following for your 2009 to-do list, and remember to check into local utility and state rebates that may compound your savings (listed online in the DSIRE database of state incentives).

  • Exterior windows, storm windows and skylights: All Energy Star windows qualify and can earn credits equal to 10 percent of the total cost, up to $200.
  • Insulation, exterior doors or roofs: You can earn credits equal to 10 percent of the costs of these products (exclusive of their installation), up to $500 total. Storm doors qualify, and insulation solutions include caulking, weatherstripping, foam sealants and other seals that limit air infiltration. Doors and insulation must meet the requirements for your region of the 2001 or 2004 International Energy Conservation Code, the model energy code for buildings. Qualifying roofs must be metal with pigmented coatings or asphalt with cooling granules that meet Energy Star requirements.
  • Central air conditioner, heat pump, water heater or bio gas (e.g., corn) stove: These qualify for up to $300 toward the full purchase price, including cost of installation. Also note that for 2009, Energy Star geothermal heat pumps are eligible for a separate tax credit for 30 percent of the cost up to a maximum credit of $2,000. They must be placed in service between January 1, 2008 and December 31, 2016.
  • Furnace or boiler: These earn you up to $150 towards the full purchase price, and/or $50 for an efficient air-circulating furnace fan, including installation cost.

Also note that strict criteria apply to eligible heating and cooling equipment, so consult the guidelines provided by the Alliance to Save Energy. Qualifying windows, doors, roofs and insulation must be expected to last at least five years (sufficiently demonstrated by the accompaniment of a two-year warranty).

Finally, keep in mind that improvements made within condos and co-ops are apportioned to the owners, and energy efficiency credits can't be taken against the Alternative Minimum Tax (AMT).

Tom Kraeutler is the Home Improvement Editor for AOL and co-author of My Home, My Money Pit: Your Guide to Every Home Improvement Adventure. He delivers money saving home improvement tips each week as host of The Money Pit, a nationally syndicated home improvement radio program.

Increase your money and finance knowledge from home

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

Intro to Retirement

Get started early planning for your long term future.

View Course »

TurboTax Articles

Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

Add a Comment

*0 / 3000 Character Maximum