On February 17th, President Obama signed the $789 billion economic stimulus bill that includes tax credit incentives for homeowners who make energy-efficient home improvements. The bill extends eligibility for tax credits through 2010 on energy-efficient improvements — including qualifying windows and doors!
The bill includes the ability for homeowners to receive a tax credit of 30 percent of the cost of qualifying energy-efficient products (windows, doors, insulation, HVAC, and roofs), up to a maximum of $1,500 per household for all improvements made in 2009 and 2010.
The requirements to qualify for the new energy tax credit include:
Windows purchased must be equal to or below a U-Factor of 0.30 and a Solar Heat Gain Coefficient (SHGC) of 0.30. The purchase of the qualified windows must be made during the taxable year for which the credit is being claimed. The credit is only allowed on the price of the qualified windows themselves, not on installation costs, onsite preparation, assembly or sales tax. The tax credit is allowable only for qualified window units placed in service in 2009 and 2010. Homeowners must save their receipts for purchased windows, along with all window labels and stickers for verification and tax recordkeeping. The windows must be installed in the taxpayer’s principal residence. This tax credit is capped at a total of $1,500 for the years of 2009 and 2010. Unlike a tax deduction, which only reduces the amount of your taxable income, a tax credit reduces the amount of tax you owe.
ENERGY STAR® is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy helping us all save money and protect the environment through energy-efficient products and practices. Check out energystar.gov/tax credit for more information on the available federal tax credit when you purchase energy-efficient windows and doors.
Jim Atkins, president of Southern Home Service, http://www.southernhomeservice.com is a Florida state-certified Building Contractor, license CBC1255867. Additional Qualifications: MySafeFlorida approved contractor- Alcoa Building Products Master Contractor-Vinyl Siding Institute Certified-Factory Certified for window and door installation and glazing-Independent distributor: PGT Windows & Doors, CGI Windows & Doors, Armor Screen Protective Systems.?
California is one of the most progressive states in the nation in terms of the California energy tax credits that are offered to both residents as well as corporations. California energy credits can include vehicle tax incentives and alternative fuel credits. These, in addition to hiring credits made available to businesses such as the WOTC California credits, can help individuals and businesses meet their tax expenses more easily during the economic downturn the country is facing.
California energy tax credits are available from both the federal and state governments. These California energy credits are broken down into those applied to homeowners and those for businesses. For homeowners who take action to conserve on energy use, they are rewarded with California energy tax credits. Ways in which homeowners qualify for this tax incentive are to add insulation to the home, or energy efficient windows or simply add seals to windows and doors. These are simple actions that yield positive results in terms of California energy tax credits. When energy saving heating systems, ventilation and air-conditioning units are added to the home, you may then qualify for additional California energy credits. Both homeowners as well as corporations can benefit from vehicle tax incentives, which come into play when an energy efficient hybrid vehicle is purchased. Alternative fuel credits may be granted for vehicles that run on a combination of electric motor, gas, hydrogen, ethanol, nitrogen gas or diesel. Corporations can also earn energy credits when they install geothermal heat pumps, photovoltaic systems, small wind generators or solar water heaters to their business sites, as an incentive to use more renewable energy technology. Sales and use tax credits may also be applied when companies buy water or pollution, energy conservation, research and development, or manufacturing and processing equipment.
In addition to energy credits, corporations in California can also earn hiring credits. Federally-based credits, such as WOTC California, can help businesses reap from $2,400 to $4,800 per eligible employee. State-based hiring credits may offer your corporation up to a hefty $13,000 per qualifying employee. These employees must meet certain requirements of belonging to recognized groups, which can include qualified disabled veterans, those who have been recently laid off or threatened with lay off, Native Americans or Pacific Islanders, those who recently qualified for or received food stamps, SSI or temporary assistance for needy families, qualifying ex-felons and certain categories of youth hires.
To learn more about energy credits as well as WOTC California hiring credits, make an appointment to speak with a certified public accountant experienced with these and other types of tax credits.
Wayne Hemrick writes about–california energy tax credits
Helping the Environment May Help Your Tax Bill
The American Recovery and Reinvestment Act provides incentives for taxpayers to purchase energy efficient appliances and upgrades to their homes. The Act increases the energy tax credit for homeowners who make energy efficient improvements to their homes and taxpayers who purchase certain energy efficient equipment or vehicles.
How Much of an Energy Tax Credit Can I Get?
The amount of the energy tax credit depends on what you purchase. The Act allows for a credit on 30% of the purchase price of all energy efficient improvements to your residence up to $1500. This applies to improvements like adding insulation, replacing windows and installing energy-efficient heating or air conditioning systems. Additionally, certain alternative energy systems, like solar hot water heaters and wind turbines, are eligible for a 30% energy tax credit for the cost of the equipment with no limit.
The Act also creates a special energy tax credit for certain plug-in, electric low-speed vehicles and two- or three-wheeled vehicles. The credit for these vehicles is 10% of the purchase price, up to $2500. Certain vehicle conversion kits also qualify. These vehicles must have been purchased after Feb. 17, 2009. The more credits you qualify for, the greater your chances of receiving a refund on your tax return.
How Do I Know if My Purchase Qualifies for the Energy Tax Credit?
For items purchased before June 1, 2009, you generally can rely on the manufacturers’ certifications and Energy Star labels that were available at the time for those products. Not all Energy Star products qualify for an energy tax credit, though. Visit the U.S. Department of Energy’s EnergyStar Web site to check on your specific products. For alternative energy systems, check the IRS website for qualification guidelines.
How Do I Claim My Energy Tax Credit?
To claim your energy tax credit, you must file IRS Form 5695 with your personal income taxes. Using an online tax preparation site, like www.efiletaxreturns.com, will help you tax as many deductions and credits as are allowable. It will also help you take whatever multiple credits you may qualify for when claiming electric or hybrid vehicles.
What Other Credits are Available for Energy-Efficiency?
Many states also have energy tax credit or incentive programs for renewable energy and energy efficiency. The Database of State Incentives for Renewables and Efficiency (DSIRE) website allows you to select your state and see what other credits may be available for you on your state return. For example, California has a list of building incentives, local rebate programs and property tax incentives that may apply depending on your city or county. Check the website to see what energy tax credits or incentives you qualify for.
Karin Velez is a freelance writer and editor whose expertise covers a wide range of topics, including finance, DIY and gardening. She and her husband live on their organic family farm in Peculiar, Missouri. More about Karin can be found at www.karinvelez.info.
