Time is running out to cash in on a popular home-energy tax credit. If you install qualified insulation or energy-efficient replacement windows, doors or skylights in your primary residence by the end of the year, you’re eligible for a tax credit equal to 10% of the cost, up to a maximum credit of $500 (but no more than $200 of material costs -- not installation costs -- can be allocated for windows and skylights).
A tax credit, which reduces the amount of tax you owe, is more valuable than a tax deduction, which merely reduces the amount of income subject to tax.
The home-energy credit also covers super-efficient central air-conditioning units, heat pumps, furnaces and water heaters. But the $500 cap is a lifetime amount, so if you have claimed $500 or more in home energy tax credits in the past, you can’t claim it again for 2011. And unless Congress acts to extend it, the home energy tax credit disappears for good at the end of this year.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
There is no income-eligibility limit, so anyone, regardless of income, can claim the home-energy tax credit. Just fill out Form 5695 when you file your 2011 tax return next spring.
There’s an even bigger tax break available for homeowners who install renewable-energy devices such as geothermal heat pumps, solar water heaters, solar panels, fuel cells and small wind-energy systems. You can write off up to 30% of the cost of buying and installing such renewable energy devices -- with no maximum amount-- in your primary residence or vacation home. Qualifying improvements can be installed through 2016. (see www.energytaxincentives.org for details). To qualify for the renewable-energy-devices tax credit, no part of the system can be used to heat a swimming pool or hot tub. You can claim the credit on Form 5695 when you file your 2011 tax return next spring.
-
Estate Planning: How to Protect Family TreasuresItems like antiques, art and jewelry, as well as family photos, can carry huge emotional ties. The more specific you are in your plans, the better for everyone.
-
How to Protect Your 401(k) in a Down MarketIf your 401(k) balance nosedives in a down market, use these four strategies to safeguard your funds.
-
Incorrect ERC? IRS Points to Five New Red FlagsTax Credits These signs could mean there’s an error in your Employee Retention Credit claim.
-
Five December 31 Tax Deadlines for RetireesThe end of the year will be here before you know it, so it might be a good idea to start thinking soon about what you need to do for taxes before it arrives.
-
Will North Dakota Property Tax Be Eliminated?Property Tax A new property tax proposal will be a key ballot item for the Peace Garden State.
-
IRS Has No Set Plan to Replace Old TechIRS What could old IRS technology mean for your federal tax return and cybersecurity?
-
Who Won the $800 Million Mega Millions?Lottery Tax What state was the winning ticket sold? The winner will get a huge payout (less some tax).
-
IRS Back Taxes Scam Call Steals MillionsScams IRS fakes are cheating thousands of people out of “overdue tax debt.” Are you next?
-
Unrealized Gains Tax: One Important Thing to Know NowCapital Gains Unrealized capital gains have taken center stage in election discussions about tax fairness and economic policy.
-
IRS: How to Get a 401(k) Match for Your Student Loan PaymentSavings Those with 401(k), 403(b), and other savings plans might get relief through their employer-provided retirement account.
