How To Claim Energy Tax Credits
 By Patrick L. Wynne

If you thought the window closed in 2009 for getting a tax break on the purchase of energy efficient upgrades for your home, here’s some good news: You have until the end of this year to claim the tax credit.

Here’s what you need to know to claim your tax credit.

Home Energy Efficiency Improvement Tax Credits
The specific energy efficient upgrades that qualify for this credit include:

• Heating, ventilating and air conditioning (HVAC) systems
• Insulation
• Roofs (metal and asphalt)
• Water heaters (nonsolar)
• Windows and doors
• Biomass stoves

These upgrades must be installed in an existing home that is your principle residence. New construction and second or vacation homes do not qualify.

The credit is equal to 30 percent of the cost of these upgrades (up to $1,500) as long as they’re purchased and installed before Dec. 31, 2010.

Residential Renewable Energy Tax Credit
In addition, a 30-percent tax credit is available if you purchase a renewable energy system, including:

• Solar water heating and electric systems
• Geothermal heat pumps
• Small wind turbines

There is no cap on this credit. You have until the end of 2016 to purchase and install the system. Existing homes and new construction, as well as principle and second residences, qualify for this credit.

Residential fuel cell and microturbine systems installed before the end of 2016 qualify for the 30-percent tax credit up to $500.

Claiming Your Tax Credit
Receiving the tax credits is easy.

If you installed upgrades last year, you’ll need to complete 2009 IRS Form 5695 and submit it with your 2009 federal income tax return this year.

If you install the upgrades in 2010, you can claim the credit on your 2010 federal income tax return by filing IRS Form 5695 with your return.

For every energy efficient upgrade you install, be sure the installer gives you the Manufacturer’s Certification Statement as proof of your purchase. In case of an IRS question or audit, you’ll need the certificate and a receipt to prove you qualify for the tax credit.

For more details on all of these tax credits, visit www.energy.gov.

Note that these are tax credits, not tax deductions. Credits are generally more valuable than deductions because they reduce the amount of tax you must pay dollar-for-dollar, while deductions only reduce your tax amount by a percentage of the amount owed.

Tax Credits For Vehicles
In addition to the credits for home energy efficiency upgrades, credits are available for the purchase of hybrid gas-electric and alternative fuel vehicles purchased before the end of this year.

The amount of the credit will vary for different vehicles depending on the vehicle’s weight and fuel economy, among other factors.

AFS Can Help
Got questions about whether you qualify for the energy efficient tax credit? Get answers from the online certified public accountants at ProTax. Through the AFS Web site, ProTax offers complete and confidential answers to your questions within two business days—and it’s included in the cost of your AFS Membership!

Get your tax refund faster by filing your tax forms electronically with TurboTax Online. AFS Members receive a 15-percent discount on this No. 1 online tax preparation program. Prepare your taxes for free and pay only when you’re ready to print or file. And there’s no software to install.

(Posted February 2010)

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