To get the maximum credit, a taxpayer would have to spend $5,000 on energy efficiency improvements. The previous maximum had been $500. The good news for homeowners is that they can claim the new credit even if they had taken the old one.
“You get a clean start with this one,’’ said Mark Luscombe, principal analyst for CCH’s tax and accounting group.
To qualify, the improvements must have been made during 2009 - or 2010 if you’re going to claim them the following year. There is no income limit for the credit, and limits on individual items are gone. That means, for example, you can claim the full credit for windows, Luscombe said.
But there’s a catch. “Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007,’’ the Internal Revenue Service said. The IRS cautioned that not all products that carry the Energy Department’s Energy Star label qualify.
So how do you know if the furnace or hot water heater you purchased is eligible?
It’s up to the manufacturer to certify that the product qualifies. The IRS recommends that taxpayers keep a copy of the certification statement.
Homeowners who choose alternative energy could be in for a bigger tax credit.
There’s a 30 percent tax credit with no maximum for homeowners who install solar water heaters, geothermal heat pumps, or small wind turbines. The credit also applies to site preparation and installation.
If you want to claim the credits, you’ll have to file Form 5695.
The tax credits for energy-efficient home improvements are in addition to those for purchasing certain hybrid or alternative energy vehicles. The credit begins phasing out after the manufacturer sells 60,000 hybrids.
For 2009 model year cars, manufacturers that had hybrids still eligible for the credit are Cadillac, Chevrolet, Chrysler, Dodge, Ford, GMC, Mazda, Mercury, Nissan, and Saturn.
There are new tax credits for plug-in electric vehicles.
The credits range from $2,500 to $15,000, depending on the kind of vehicle, its weight, and its battery.
Carole Feldman writes for the Associated Press.
