Federal Energy Tax Credits for Consumers

The emphasis on sustainable home design and renewable source of energy had led to federal energy tax credits that consumers and businesses can take advantage of. Federal tax credits are better than tax deductibles in a way that these credits significantly reduce your taxes owed to the state. By itemizing the energy-efficient items you use, you can lower down the total amount of taxes that you will have to pay. For this reason, vehicles and appliances that are energy-efficient doesn’t only give you savings in your monthly bills, but can mean better mileage, lower gasoline costs, reduced risk from indoor air pollutions, while you help save the environment from global warming.

When you have an energy-efficient home, equipment, or vehicle, you don’t only get federal energy tax credits, but you may be eligible for rebates from your state. You may get in touch with your local state department to learn more about their incentive programs on energy efficiency and energy tax credits. With the advent of the American Recovery and Reinvestment Act of 2009, individuals who make a smart investment in energy-efficient products will get federal energy tax credits increased to up to 30% of the total cost of all qualifying energy-efficient goods such as insulation, exterior windows, heating, and air-conditioning units.

Important Things You Need to Learn About Federal Energy Tax Credits:

1. To be eligible for the new federal energy tax credit law, your energy-efficient products must be in service between January 1, 2009 and December 21, 2010.

2. This tax credit will apply only for the tax payer’s principal home. An exception to the rule is if solar water heater and panel, geothermal heat pump, or a small wind energy system had been in place in your secondary home.

3. You can claim $1,500 maximum in your total energy tax credit on products installed at your home between 2009 – 2010.

4. You need to have a manufacturer’s certification statement in order to be eligible for the federal energy tax credit.

5. If these energy-efficient products are placed in 2009, you may file for it by April 15, 2010. Use the IRS Tax Form 5695 – 2009 version.

6. When you buy and install energy-efficient windows, roof, or doors, insulation, heater, or air conditioning at your home, you will receive a federal energy tax credit of up to 30 percent of the overall cost of these products.

7. You can get a residential renewable energy tax credit when you install a solar-powered equipment, geothermal heat pumps, micro turbine, fuel cells, and wind-energy system into your home. These can receive up to 30% of its cost, valid until December 31, 2016.

8. Whether you use your vehicle for business or pleasure, know that a tax credit of $2,500 up to $7,500 can be given to hybrid vehicles using a plug-in for power. The tax credit will be computed on your vehicle’s weight, fuel efficiency, and technology. Note that the first 250,000 vehicles purchased get full federal tax credits and there is a vehicle limit of 60,000 per manufacturer before the model is phased out. Use the IRS Form 8910 for personal hybrid vehicles and the IRS Form 3800 for business hybrid vehicles.

9. Hybrid conversion kits for vehicles to be energy-efficient can enjoy a federal tax credit equals to 10 percent of the total cost of vehicle conversion. This percentage is also applicable for low-speed electric cars or those running on two or three wheels.

When energy sources are becoming scarce and the need for renewable, efficient energy is on the rise, we can only hope for better alternatives to keep our home and office running smoothly, minus the waste of energy and money. By proactively choosing energy-efficient products, you become a better consumer who can make a difference in choosing environmentally-friendly alternatives as well. For more information on federal energy tax credits for individual consumers, you may get in touch with the IRS at toll-free number: 1-800-829-1040. For businesses, you may call this IRS toll-free hotline: 1-800-829-4933. For the hearing-impaired, get in touch with IRS at 1-800-829-4059 (TDD). Help Conserve Energy and Have Lower Taxes!

RESOURCES:

IRS.gov. “ Energy Incentives for Individuals in the American Recovery and Reinvestment Act. “ November 2009. http://www.irs.gov/newsroom/article/0,,id=206875,00.html

US Department of Energy. “ Consumer Energy Tax Incentives. “
http://www.energy.gov/taxbreaks.htm

Energy Star. “ Federal Tax Credits for Energy Efficiency. “ September 2009.
http://www.energystar.gov/index.cfm?c=tax_credits.tx_index

Consumer Reports Magazine. “ Energy Tax Credits at a Glance. “ October 2009.
http://www.consumerreports.org/cro/magazine-archive/october-2009/home-garden/cut-your-energy-bills/energy-tax-credits-at-a-glance/cut-your-energy-bills-energy-tax-credits.htm