On October 3, 2008, President Bush signed into law the "Emergency Economic Stabiliation Act of 2008" which included an extension of the residential tax credits for energy efficient improvements. The previous tax credit expired at the end of 2007. The extension is for improvements made from January 1 - December 31, 2009. Improvements made in 2008 are not eligible for a tax credit.
SELECTED TAX CREDITS:
- $300* Central Air Conditioner or Heat Pump
- $150 Furnace or boiler
- Up to $200* in Windows
- Up to $500* Insulation and Sealing
- Up to $2000 Ground-source heat pump
* Maximum of $500 total for home improvements
What is the difference between a tax credit and a tax deduction?
A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions - such as those for mortgages and sharitable giving - lower your taxable income. If you are in the highest 35% tax bracket, the income tax you pay is reduced by 35% of the value of your tax deduction. But a tax credit reduces your federal income tax by 100% of the amount of the credit.
What do you need to do to get the tax credit?
File IRS Form 5695 with your taxes. In addition, you will need to keep receipts proving that you purchased the improvements and a copy of the manufacturer's certification (or the ENERGY STAR label for windows).
Visiti the IRS (www.irs.gov.com) or speak with a certified account for more information.