Energy Tax Credits

Energy Tax Credits

How the Program Works- Federal Tax Credits

As part of an effort to reduce dependence on foreign sources of energy, the American Recovery and Reinvestment Act of 2009 provides a tax credit to help offset the costs of making energy efficiency improvements to your home. Some key details of the program are as follows:

  • The tax credits apply to a variety of products (including installation costs) such as windows, doors, heating and cooling equipment and more.
  • The amount of the credit is equal to 30% of the installed cost of the qualifying products, up to a total of $1,500.
  • If a qualifying purchase is not large enough to qualify for the maximum credit of $1,500, the remaining available tax credit can be claimed for additional qualifying purchases.

Getting your tax credit can be a simple process. Jeff’s Heating and Cooling will help you choose and install the furnace, air conditioner or heat pump that fits your needs and qualifies for the tax relief. Then you include Form 5695 with your 2010 tax return, stating which improvement you chose. The IRS will give you a tax credit of 30% of the cost of your efficient new equipment, up to $1500 per household. To qualify for the credit, heating and cooling improvements must be made to an existing home that is your primary residence. The equipment manufacturer produces, and Jeff’s Heating and Cooling provides the certification that your new equipment meets the guidelines established for the tax credits. This manufacturer certification, along with your Jeff’s Heating and Cooling purchase receipts are all you need to back up your tax claim.

The Economic Advantages of Tax Credits

The reason many homeowners are so excited about this program is because tax credits, unlike deductions, are subtracted directly from the total amount you owe on your personal income taxes. For example, if you complete your tax return and calculate that you owe the IRS $2,000, a tax credit of $1,500 will reduce your tax bill to only $500. Of course, be sure to check with your tax adviser on how to best take advantage of the tax credits.

Tax Credits Available in 2009 and 2010

To take advantage of the American Recovery and Reinvestment Act of 2009 tax credits, you must purchase your qualifying high-efficiency comfort system between January 1, 2009 and December 31, 2010. Better yet, your energy savings won’t be limited to this one-time tax credit. You’ll continue saving every month with reduced monthly cooling and heating bills. For more information, contact Jeff’s Heating and Cooling today.

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