Solar installations can save you money on your tax bill next year
How would you like a credit on next year’s tax bill? The United States Internal Revenue Service is offering tax credits up to 30% of your cost for solar installations and other energy saving systems (to a maximum of $1,500) for the tax years 2009 and 2010. A tax credit means that the money comes right off the bottom line – what you owe the IRS. Its more generous than a deduction, which is used to figure your actual tax liability.
So, let’s get to the point of how to save some serious cash!
Before we go any further, click right here to access the forms for federal residential energy credits. Now, let’s review how winterizing your home can give you a credit on your tax bill. From the Energy Star website:
- must be “placed in service” from January 1, 2009 through December 31, 2010
- must be for taxpayer’s principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes qualify)
- $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
- must have a Manufacturer Certification Statement to qualify
- for record keeping, save your receipts and the Manufacturer Certification Statement
- improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
- If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.
Turn that meter a bit more slowly with energy efficient installations
Taking $1,500 right off the top of your tax bill is a great reward for those that are considering solar installations and other energy efficient measures.
But remember…. this is the IRS! You have to carefully document your tax credit claim, or risk owing more than you might otherwise think. Common questions to consider:
1. Do you get a credit for the cost of installation (labor), or just the equipment itself?
2. Are you dealing with a reputable manufacturer? Be sure to check its tax credit certification beforehand.
3. How much will you save in your electricity bill on average over the course of a year?
4. Will your home be more comfortable year-round as a result?
The tax credits are there for the taking! From solar-powered electric systems to solar water heaters, geothermal heat pumps, wind turbines and fuel cells, there are many ways for you to save on both your tax bill and your monthly utility statements.
Tags: credit on tax bill, energy star, internal revenue service, save money on tax bill, solar installations, tax credit energy efficiency, tax credits, winterizing home
