The cooler weather is moving into Missouri and many homeowners are thinking of winterizing their homes. The Internal Revenue Service wants people to know there are some big tax savings for those who save energy through their efforts to winterize.
Part of the American Recovery and Reinvestment Act provides for home energy tax credits for homeowners who go green by investing in alternative energy equipment. The credits amount to 30 percent of the amount spent up to a maximum tax credit of $1,500.
“By spending as little at $5,000 before the end of the year on energy saving improvements to your main home you can get up to a $1,500 tax credit,” said Michael Devine, IRS Media Relations Specialist for Missouri and Kansas. “That’s a dollar for dollar reduction of your tax bill next year.”
A tax credit is more valuable to taxpayers than is a tax deduction.
“A tax credit will reduce your tax bill dollar for dollar and a tax deduction is only a percentage,” said Devine. “For example, if you’re in the 25 percent tax bracket and you have a $1,500 tax deduction your tax bill’s only going to be reduced by about $375. If that’s a $1,500 tax credit then your tax liability will be reduced $1,500.”
Among the items that qualify: Certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass. Not all energy-efficient improvements qualify for the tax credits, so homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements.
Homeowners should keep in mind that the purchase and installation of qualifying items can be spread out over this calendar year and next.
“Anything that you do this year to improve the energy-efficiency of your home – let’s say new doors, new windows – you can count on the 2009 tax return,” said Devine. “Next spring, if you wanted to put in a new high-efficiency heating and air conditioning system you could claim those on your 2010 return. The important thing to remember is that there’s a maximum credit of $1,500 for 2009 and 2010.”
More information on the energy tax credits is available on the IRS web site.