How To Claim Your Energy Tax Credits
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act, also known as the Economic Stimulus Bill, which included energy tax credits. This legislation is to help increase spending and provide tax incentives to improve the American economy. It is also a way to reduce the need for foreign fuel by increasing the efficiency of our homes and commercial buildings.
The American Recovery and Reinvestment Act of 2009 gives increased tax credits for home improvements made to increase energy efficiency in the home. With the expensive costs of home improvements, these tax credits can help offset the cost of improving or renovating your home.
A tax credit is more valuable to home owners than a deduction, because it gives the taxpayer a dollar for dollar credit that is deducted from the actual amount of tax owed to the Internal Revenue Service. With a deduction the amount reduces the adjusted gross income which your taxes are based on. If applying for the credit, it gets added to the refund. If you are not required to file a tax return and you have made improvements that qualify for the credit, you can file and still receive your credits in a refund.
So if you are planning to upgrade or replace your appliances, windows, doors, insulation or other items to increase the efficiency of your home, this is a good time to look into the credits and what they can do for you. Here are the steps you need to follow to claim your tax credits:
Step One – When Improvements Must Be Completed
In order to claim the benefits for this stimulus tax credit, improvements made to your home to increase energy efficiency, must be completed from January 1, 2009 through December 31, 2010. You need to also keep in mind; some of these improvements take time to be completed. Many areas require building permits. These permits need
drawings and/or forms to be submitted to the county office where your home is located. If this is the case, you might also need licensed contractor to file for the permit.
Step Two – Residence Types the Tax Credits Cover
Only improvements to your primary residence can be used to apply for the tax credits for energy efficiency. A primary residence can be a detached home, a duplex, condominium, townhouse, Pre-manufactured home (mobile home) or even a houseboat. You need to make sure your residence qualifies for the stimulus tax credit before starting the work.
Step Three – Items You Need to Apply
You must save all your receipts for the improvements. These receipts are for all labor and materials needed to complete the improvements whether you are doing the work yourself or hiring a contractor to do the improvement or install an appliance.
You will also need the Manufacturer Certification Statements from the energy efficient products you are using for the project. Most energy efficient products have an Energy Star label; if not, contact the store or manufacturer for a certificate. Without all the proper labels, certificates and/or paperwork you might have trouble receiving the tax credits offered in the stimulus bill.
Step Four – Applying for Your Tax Credit
All improvements that qualify for energy efficiency home improvements during 2009 should be claimed on your 2009 income tax form, which needs to be filed by April 15, 2010. Also any improvements completed in 2010 are to be claimed on your 2010 income tax form to be filed by April 15, 2011.
It is advisable to make sure the improvements you are planning to make are qualified under the stimulus bill tax credits for energy efficiency. Also contact your accountant or your tax preparation service, and ask about the proper way to claim your improvements based on the stimulus bill tax credits for energy efficiency.Source: m.finweb.com