Graphic courtesy of taxresolutioninstitute.com.
Income tax season is here again and it’s time to start getting everything together – tax documents, receipts, and any other papers that can help you get a few more dollars back.
This tax season is especially important for anyone that has bought and installed energy efficiency devices, materials, or appliances in their home over the last two years. This will be the last time that you will be able to file for major tax credits (tax refunds) of up to $1,500 for these types improvements.
For any products that you buy this year and in the future, there will be a lifetime $500 tax credit cap. It’s a little complicated, but basically it means that no matter how much you pay for any home energy efficiency products this year, when the time comes to file taxes next year, the most you can get back is $500. For example, if you get a $400 tax credit this year, then next year when you file, the most you can get is $100.
The good news is that for filings that you make this year, the tax credit cap is $1,500. These tax credits only apply for your permanent residence (where you live most of the time).
The types of home energy efficiency devices, materials, and appliances that qualify for tax credits include:
- Windows, doors, and skylights.
- Insulation and home sealing products.
- Electric heat pump water heaters.
- Corn, pellet, and wood burning biomass stoves.
For any devices, materials, or appliances that you file on your tax returns for 2010, you should also have (for your own piece of mind) a manufacturer’s certification statement. This is a statement from the manufacturer saying that the product you bought qualifies for a tax credit.
Manufacturers should have these certifications on their websites, if not, call the manufacturer to find out if they have them.
Another important thing to remember is that you need to keep copies of your product certification statements for your records, but you don’t have to submit them with your tax returns.
Criteria for Tax Credits on Home Energy Efficiency Products
Windows, Doors, and Skylights
Savings: Up to 30 percent of the cost (not including installation/labor costs) up to $1,500.
Timing/Qualifications: All such products installed in your primary residence from Jan. 1 to May 31, 2009, just need to be Energy Star qualified. This is except for doors in several California counties - Alpine, Lassen, Modoc, Mono, and Plumas. These counties fall into the 2000 International Energy Conservation Code (IECC) climate zone that specifies a U-Factor of 0.35 for exterior doors.
All products installed in your primary residence from June 1, 2009 to Dec. 31, 2010 need to have a U-Factor and Solar Heat Gain Coefficient (SHGC) of less than or equal to 0.30. You can find the U-Factor and SHGC on the National Fenestration Rating Council (NFRC) label. See an example of the NFRC label.
Insulation & Home Sealing Products
Savings: Up to 30 percent of the cost (not including installation/labor costs) up to $1,500.
Timing/Qualifications: Products installed in your primary residence from Jan. 1, 2009 to Dec. 31, 2010. Typical bulk insulation products can qualify, such as: batts, rolls, blow-in fibers, rigid boards, expanding spray, and pour-in-place.
Products that reduce air leaks (as long as they come with a manufacturer’s certification) also qualify, which include:
- Weather stripping.
- Spray foam in a can that is designed to air seal.
- Calk designed to air seal.
- House wraps.
Even if you did the insulation/home sealing yourself, you still can get a tax credit for it.
Electric Heat Pump Water Heaters
Savings: Up to 30 percent of the cost (including installation/labor costs) up to $1,500.
Timing/Qualifications: Products installed in your primary residence from Jan. 1, 2009 to Dec. 31, 2010. All Energy Star electric heat pump water heaters qualify for the tax credit.
Be aware that there isn’t any tax credit for electric storage tanks or electric tankless water heaters.
Corn, Pellet, & Wood Burning Biomass Stoves
Savings: Up to 30 percent of the cost (including installation/labor costs) up to $1,500. The cost of fuel isn’t included.
Timing/Qualifications: Products installed in your primary residence from Jan. 1, 2009 to Dec. 31, 2010. The stove must be used for heating or water heating, and have a thermal efficiency rating of at least 75 percent as measured using a lower heating value. To verify tax credit eligibility, make sure you get a manufacturer’s certification statement.
To apply for any of the home energy efficiency tax credits mentioned in above, you need to fill out the 2010 IRS Form 5695, attach it to your 1040 form, and fill out line 52 on the 1040 form. All filings need to be submitted to the government no later than April 18, 2011.
Home Devices & Appliances Not Qualifying For Tax Credits
- Ceiling fans.
- Clothing washers and dryers.
- Lighting (Light Fixtures, CFLs, and LEDs).
- Dehumidifiers.
- Dishwashers.
- Electric furnaces/boilers.
- Evaporative coolers (swamp coolers).
- Ovens/ranges.
- Programmable thermostats.
- Refrigerators.
- Room air conditioners.
- Televisions.
- Toilets.
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