Income Tax Exemption

In these challenging economic times, homeowners are looking to pinch pennies wherever they can. With fuel prices going through the roof, homeowners often evaluate their energy usage and come to the conclusion that replacing old and energy-inefficient appliances would make a significant impact on their monthly energy bills. Of course, the homeowners then face the daunting purchase price of new, energy-efficient appliances. Fortunately, the government has stepped in and offers tax credits for the purchase of Energy Star appliances.

Even without the tax credit, most Energy Star appliances will save the consumer enough money over the life of the product to make up for the purchase price. But the tax credits which are currently available increase this savings even more. There are various Energy Star rebate programs in place, which vary by state, so make sure to research the specifics of your particluar product carefully before making a purchase. Check here for your state’s rebate information http://www.energysavers.gov/financial/70022.html

Through December 2010, consumers are eligible for a tax credit of up to 30% of the purchase price (up to $1500) of the following products: biomass stoves, heating, ventilation, and air conditioning, insulation, metal & asphalt roofs, non-solar water heaters, windows, and doors. Even better, these items are eligible for a 30% of purchase price tax credit (with no upper limit!) until December 2016: geothermal heat pumps, small residential wind turbines, and solar energy systems. Additionally, residential fuel cells and microturbines are eligible for a tax credit of up to 30% of the purchase price (up to $500 per .5kW of power capacity) through December 2016.

In order to receive your tax credit, you will need to claim the credit on your 2010 income taxes. Make sure to save your purchase receipt as well as the Manufacturer’s Certification Statement (that certifies the product for Energy Star status). Also, submit form 5695 with your taxes. Be aware that renters aren’t eligible for any of the Energy Star tax credits.

Also, when evaluating your eligibility for these Energy Star tax credits, you need to determine your “tax liability.” Tax liability is the total amount of federal income tax that you pay. Since these Energy Star tax credits are “non-refundable,” you can’t claim more tax credits than you pay in federal income tax. Also, keep in mind that most of these tax credits are available only for items that are put into use in your principal residence, although vacation homes are eligible for a few of the credits.

So, after carefully evaluating your household needs, budget, and Energy Star tax credit eligibility, you can determine whether the purchase of an Energy Star appliance would be a smart financial move.

To learn more about energy efficient doors and windows, visit Think Window Pro.

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