How to Claim Your Energy Tax Credits


Energy tax credits on select improvements available through end of 2013.
Published: January 23, 2012
By: Donna Fuscaldo

The feds have resurrected, through 2013, $500 tax credits for energy-efficient home improvements. If you upgraded one or more of the following systems, you may be eligible to take a tax credit on your return.

Biomass stoves
Heating, ventilation, air conditioning
Roofs (metal and asphalt)
Water heaters (non-solar)
Windows, doors, and skylights
Storm windows and doors

The energy tax credits are small, but at least a credit is better than a deduction:
Deductions just reduce your taxable income.

With a credit, you get a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.

Limits on IRS energy tax credits besides $500 max
Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.

$500 is a lifetime limit. If you pocketed $500 or more in 2009, 2010, and 2011 combined, you’re not entitled to any more money for energy-efficient improvements in the above seven categories. But if you took $300 back then, for example, you can get up to $200 in 2012.
With some systems, your cap is even lower than $500.

No matter how much you spend on some approved items, you’ll never get the $500 credit — though you could combine some of these:

System New windows $200 max (and no, not per window—overall)

Advanced main air-circulating fan $50 max

Qualified natural gas, propane, or oil furnace or hot water boiler $150 max

Approved electric and geothermal heat pumps; central air-conditioning systems; and natural gas, propane, or oil water heaters $300 max

And not all products are created equal in the feds’ eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. has the details.

Tax credits cover installation — sometimes

Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)

Installation covered for:
Biomass stoves

Non-solar water heaters

Installation not covered for:
Windows, doors, and skylights

How to claim the energy tax credit
Determine if the system you installed is eligible for the credits. Go to Energy Star’s website for detailed descriptions of what’s covered; then talk to your vendor. The site may not have been updated by the Department of Energy.
Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.

File IRS Form 5695 with the rest of your tax forms in 2012.

This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.

Donna Fuscaldo has written about personal finance for more than decade for Dow Jones Newswires, the Wall Street Journal, and Fox Business News. She’s currently a freelance writer with her own home office.

Read more:

Team Pendley
with RE/MAX Integrity
We Go The Extra Mile, It’s Less Crowded!

Pat Pendley, Principal Broker
(541) 990-2530

Christie Pendley, Broker
Certified Distressed Property Expert
(541) 619-3640

Doug Hall, Broker
(541) 979-0571

**Pat Pendley, Christie Pendley ,and Doug Hall, are licensed Real Estate Brokers in the State of Oregon with RE/MAX Integrity

Check out our Blog




Check Out Our Google +


Team Pendley is a proud sponsor of Linn County CASA


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: