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Archive for Sunday, January 27, 2008

Taxpayers can warm up with energy efficiency credits

January 27, 2008

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You strive to save money. You work to protect the environment. You've made efficiency upgrades at your home, hoping to chill rising energy bills.

Now you can get some money back from Uncle Sam.

The IRS offers Energy Tax Credits on a variety of purchases, renovations and other upgrades that have been done to help make your home more energy efficient.

A purchase of a hybrid or alternative-fuel vehicle also may qualify for credits.

The credits provide either pure, dollar-for-dollar reductions on your tax bill, or pump additional funds into your refund.

"And it's all individual: what you did, and how much it cost," said Michael Devine, an IRS spokesman for Kansas. "If you're eligible for a credit, you need to claim it."

A taxpayer can claim a credit for 10 percent of the cost for a variety of home energy-efficiency improvements, including those involving water heaters, heat pumps, furnaces, central air conditioners, insulation and exterior windows and doors, including certain storm doors.

The total credit cannot go beyond $500, and that's for all tax years after 2005. Also, there are limitations for specific improvements, such as $200 for windows and $50 for certain air-circulating fans.

This is the final year to claim such credits, although the program for many energy-efficient vehicles has been extended through 2010 for the original owners of qualified vehicles.

For more information about which vehicles qualify for a tax credit, and for how much, visit www.irs.gov and click on the section for "Hybrid Cars and Alternative Fuel Vehicles."

Filing for such credits - for home improvements for for vehicles - is easier than ever, Devine said. Detailed instructions are included with IRS Form 5695, which is available at the IRS Web site.

Better yet, he said: Compile and file your tax return electronically.

"This is one of those great reasons to do your tax returns electronically," he said. "Whether you use a professional tax preparer or you're doing it yourself, a program will prompt you : and walk you through the steps to claim the credits. It's much easier than doing it on paper, and much more accurate and probably a lot faster."

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