The IRS recently issued Special Edition Tax Tip 2009-12, Seven Facts about the Nonbusiness Energy Property Credit, to inform taxpayers of bigger tax savings available for taking certain energy-saving steps this year and next year.
Valerie RumboughAccording to this tax tip, the new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined. This means that the taxpayer can spend as little as $5,000 on improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems. Labor costs for installing some of these items also qualify.
To qualify as “energy efficient” for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007. Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers’ Web site.
Qualifying improvements must be placed into service during the 2009 or 2010 calendar years, and must be made to the taxpayer’s principal residence located in the United States. To claim the credit, attach Form 5695, Residential Energy Credits, to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.
For more information, consult your CPA or the IRS Web site, at www.irs.gov.
Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.