Question
What's the difference between a tax credit and a tax deduction?
Answer
A tax credit reduces the amount of income tax you have to pay. For example, if you owe $800 in taxes and have a $300 tax credit, then you will only owe $500. Or if you owe nothing, you'll get a $300 refund. A tax deduction reduces the amount of income subject to tax. For example, if your taxable income is $25,000 and you have a $500 tax deduction, your taxable income would be reduced to $24,500.
Question
Can I get the tax credits for windows, doors, insulation and roofs on a renovation or addition?
Answer
Yes, you can get the tax credit for windows, doors, insulation, and roofs, as long as they are done to a renovation or addition on your existing home.
Question
Does the $1,500 tax credit double for married people filing a joint tax return?
Answer
No, the $1,500 tax credit does not double for married people filing jointly... unless both you and your spouse owned and lived apart in separate main homes.
However, if you were to both file separately, you could both claim the $1,500, as long as you are both claiming separate expenses. For example, you could spend $5,000 on windows and get the $1,500 tax credit (30% of $5,000 = $1,500), and you partner could spend $5,000 on a new HVAC system and get $1,500 back for that.
Question
Are installation costs covered by the tax credits?
Answer
Installation costs ARE COVERED for:
• HVAC (Heating, Ventilation and Air Conditioning) systems
• Biomass Stoves
• Water Heaters (including solar)
• Solar Panels
• Geothermal Heat Pumps
• Wind Energy Systems
• Fuel Cells
The tax credit for HVAC, biomass stoves, and non-solar water heaters is 30% of the total cost (product + installation) up to $1,500. The law specifies installation costs include: "expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property."
The tax credit for solar water heaters, solar panels, geothermal heat pumps, wind energy systems, and fuel cells is 30% of the total cost (product + installation), with no upper limit. The law specifies installation costs include: "labor costs properly allocable to the onsite preparation, assembly, or original installation of the property and for piping or wiring to interconnect such property to the home."
Installation costs are NOT covered by the tax credit for:
• Windows
• Doors
• Insulation
• Roofs
The tax credit for windows, doors, insulation and roofs is for 30% of the cost of materials, up to $1,500.
Question
How has the new Stimulus bill affected the tax credits for energy efficient home improvements?
Answer
On February 17, 2009, President Obama signed a stimulus bill (The American Recovery and Reinvestment Act of 2009) that made some significant changes to the energy efficiency tax credits. The highlights are:
• The tax credit that was previously effective for 2009 have been extended to 2010 as well.
• The tax credit has been raised from 10% to 30%.
• The tax credits that were for a specific dollar amount (ex $300 for a CAC), have been converted to 30% of the cost.
• The maximum credit has been raised from $500 to $1500 for the two years (2009-2010). However, some improvements such as geothermal heat pumps, solar water heaters, and solar panels are not subject to the $1,500 maximum.
• The $200 cap on windows has been removed, but the requirements for windows have been increased significantly. Not all ENERGY STAR qualified windows will qualify.
Question
Is the $1,500 tax credit available for each improvement? Can I get $1,500 for windows and another $1,500 for a new HVAC system?
Answer
No, the $1,500 tax credit is a total combined credit for all tax years (2009 & 2010) for each tax return filed. So, basically you can spend up to $5,000 during this 2 year period on a single or multiple improvements, and get 30% or $1,500 back as a tax credit.
Question
What products are eligible for a tax credits for energy efficient home improvements? Are they available for new construction also? What about rental until and vacation homes.
Answer
Tax credits are available at 30% of the cost, up to $1,500 total, in 2009 & 2010 (for existing homes & your primary residence only) for:
• Windows and Doors
• Insulation
• Roofs (Metal and Asphalt)
• HVAC
• Water Heaters (non-solar)
• Biomass Stoves
Tax credits are available at 30% of the cost, with no upper limit through 2016 (for existing homes, including vacation homes and rentals, & new construction) for:
• Geothermal Heat Pumps
• Solar Panels
• Solar Water Heater
• Small Wind Energy Systems
• Fuel Cells
Question
Where do I get the rebate form for my ENERGY STAR qualified product?
Answer
ENERGY STAR is a U.S. Government program and does not offer rebates. However, some ENERGY STAR Partners offer rebates on ENERGY STAR products. You may find information in our rebate locator. The rebate locator provides a direct link to the Web site offering the rebate and/or a consumer hotline. ENERGY STAR relies on its partners for such information. If you do not find any special deals for your zip code, you may want to call your utility company, state energy office, or consult the Database of State Incentives for Renewables and Efficiency.
Question
Can sliding glass patio doors qualify for the tax credit?
Answer
Yes, sliding glass patio doors and French doors "placed into service" in 2009 and 2010 are eligible for the Federal tax credit as long as they meet the criteria (U-factor <= 0.30 & SHGC >= 0.30). The tax credit is for 30% of the total cost, up to $1,500.
Save your receipts and the Manufacturer's Certification Statement for your taxes.
Question
Are garage doors covered by the federal tax credit?
Answer
Garage doors installed in 2009 or 2010 may be eligible for the tax credit provided that the door is installed in or on an insulated garage as a component of the taxpayer’s principal residence (does not need to be attached), the garage door meets the other requirements of the tax credit (i.e. it has a U factor <= 0.3 and a SHGC <= 0.3), and the garage door is certified by the manufacturer. Installation costs are NOT covered for garage doors, just the cost of the garage door itself is covered. ENERGY STAR does not label garage doors.
Question
Is insulated siding covered by the energy tax credits?
Answer
The IRS clarified in Notice 2006-53 that exterior siding does not qualify as an Eligible Building Envelope Component for purposes of the energy tax credit.
Question
Does ENERGY STAR provide financing?
Answer
ENERGY STAR does not provide financing. Partners of the ENERGY STAR Program such as: State Energy Offices, product manufacturers, and/or local utility companies sometimes offer financing options.
Question
What form does a builder need to fill out for the Home builder tax credit?
Answer
To claim the home builder tax credit the eligible contractor must complete IRS form 5695. The tax form will be posted on the IRS web site at www.irs.gov.
Question
I don’t have to file income taxes; can I still get the energy efficiency tax credit?
Answer
According to the IRS, if a person does not owe federal income taxes, they cannot claim a tax credit. The energy efficiency tax credit is technically "non-refundable" which means at the end of the year, you can't get back more in credits than you paid to the government in taxes throughout the year. So, if you don't pay any taxes, you can't get the credit.
Question
Can window sash replacement products be ENERGY STAR qualified? Can they qualify for the tax credit?
Answer
No, sash replacement products are not included in the window product category for ENERGY STAR because the National Fenestration Rating Council (NFRC) cannot test these products as a complete system. The ENERGY STAR windows qualification is based on the whole window performance.
In addition, window components, such as sashes, do not qualify for the federal tax credit. You would have to have purchased the whole window.
Question
What happens to the products that were purchased between January 1, 2009 and February 16, 2009 that were eligible at that time they were purchased, but are no longer eligible because of the increased qualifications passed on February 17 in the Stimulus Act? Are these products still eligible for the tax credit?
Answer
The qualifications in the Stimulus Act were effective on February 17, 2009. The amount of tax credit you can receive was retroactively effective as of January 1, 2009 (for example, windows were increased from "10%, Up to $200" to "30% up to $1,500").
So, if a product was installed prior to February 17, 2009, and it met the previous criteria (in effect at the time of installation), you are eligible for the new tax credit amount (in this example for windows, you'd get the full 30%, up to $1,500 tax credit).
Question
If I am getting a refund on my taxes, can I still get the tax credit for energy efficiency home improvements?
Answer
Most likely you can, as long as the total amount of income taxes that you have paid throughout the year (check your W2 for this amount) is more than the total amount of tax credits that you are claiming. You can't get more money back from the government than you paid in income taxes. If you don't pay any taxes, then you can't get the credit.
Question
What's the difference between a tax credit and a tax deduction?
Answer
A tax credit reduces the amount of income tax you have to pay. For example, if you owe $800 in taxes and have a $300 tax credit, then you will only owe $500. Or if you owe nothing, you'll get a $300 refund. A tax deduction reduces the amount of income subject to tax. For example, if your taxable income is $25,000 and you have a $500 tax deduction, your taxable income would be reduced to $24,500.
Question
Can I get the tax credits for windows, doors, insulation and roofs on a renovation or addition?
Answer
Yes, you can get the tax credit for windows, doors, insulation, and roofs, as long as they are done to a renovation or addition on your existing home.
Question
Does the $1,500 tax credit double for married people filing a joint tax return?
Answer
No, the $1,500 tax credit does not double for married people filing jointly... unless both you and your spouse owned and lived apart in separate main homes.
However, if you were to both file separately, you could both claim the $1,500, as long as you are both claiming separate expenses. For example, you could spend $5,000 on windows and get the $1,500 tax credit (30% of $5,000 = $1,500), and you partner could spend $5,000 on a new HVAC system and get $1,500 back for that.
Question
Do I have to first subtract my state or local rebates ("subsidized energy financing") that I get for my Section 25D property (solar panels, solar water heaters, geothermal heat pumps, fuel cells, &wind generators) before I calculate the 30% federal tax credit? Answer
No, you do not have to first subtract the amount for any state or local rebates that you got on Section 25 D property (solar panels, solar water heaters, geothermal heat pumps, fuel cells, wind generators) - you can take 30% off the full amount you paid.
There was a section of the law, before the Stimulus Bill, that required you to first subtract funding from state or local programs. But, the Stimulus Bill specifically removed this language, effective January 1, 2009.
Here's the language that was deleted:
(9) Property financed by subsidized energy financing
For purposes of determining the amount of expenditures made by any individual with respect to any dwelling unit, there shall not be taken into account expenditures which are made from subsidized energy financing (as defined in section 48 (a)(4)(C)*).
*The term "subsidized energy financing" (in section 48 (a)(4)(C)) means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designated to conserve or produce energy.
What Qualifies?
* If your work order does not break down the cost of product vs. labor, use the following chart to determine the eligible amount for the material cost:
Product Materials
Windows 85%
Doors 85%
Siding 19% (The Act only covers Insulation Cost, not the Siding itself)