Lets face it: taxes are confusing. When that certain time of year rolls around, feelings of apprehension and dread have a tendency to appear. Perplexing language, strange looking forms and a constantly changing tax code can leave one utterly bewildered.
If you received a tax credit last year for installing some energy efficient windows or a brand new solar water heater, you are probably wondering if there is a credit to be had again this year or if you no longer eligible. Fortunately, online tax software companies are available to help you figure it out and get the maximum refund that you deserve.
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act was signed into law by President Obama on December 17th, 2010. This law extends the tax credits available for energy efficiency created by the American Recovery and Reinvestment Act of 2009.
American Recovery and Reinvestment Act of 2009, albeit at decreased levels. Tax breaks are still available to private home-owners who make eco-friendly improvements and upgrades. These changes help to reduce costly bills, improve comfort at home and decrease the use of limited energy resources.
The Residential Energy Property Credit allows for a 10% tax credit or a $500 lifetime limit for energy efficient improvements made to existing homes. There is a $200 credit for installing EnergyStar windows, a $150 allowance for furnaces and boilers that are 95% efficient, and a $50 tax credit for installing an advanced main air circulating fan. Other ways to keep those energy bills low include adding insulation to your attic and sealing holes in the air ducts so that air is not lost through leaks.
The Residential Energy Efficient Property Credit helps home-owners purchase alternative, renewable energy appliances such as solar hot water heaters and wind turbines. The tax-payer can receive a credit of 30% with no upper limit. You do however need to make sure that your energy costs are reduced by the amount being claimed, which is why it is important to hold onto all receipts and Manufacturer Certification Statements. Products that are eligible for the tax credit are geothermal heat pumps, solar energy systems, wind energy systems, and fuel cells (up to $500 per 0.5 kw of power).
Of course, just because you’ve already met the maximum amount of energy tax credits doesn’t mean that you should forget about upgrading. There are many quick and easy things you can do at home to reduce monthly energy bills and conserve electricity. Replacing your light bulbs with compact fluorescent lights, unplugging unused devices, cleaning your furnace filter once a month and insulating your water heater are just a few examples. Also, older appliances use a lot more energy than newer models, so by replacing them you’ll end up saving money and energy resources in the long term. By being energy-efficient at home we can all do our part to help future generations.
Guest post by Sarah Parker