Energy-saving home upgrades can bring money at tax time

The Internal Revenue Service reminds taxpayers that some energy-saving tax benefits enacted in last year’s American Recovery and Reinvestment Act are still in effect in 2010.

By: Staff Report, Alexandria Echo Press

he Internal Revenue Service reminds taxpayers that some energy-saving tax benefits enacted in last year’s American Recovery and Reinvestment Act are still in effect in 2010.

Energy-efficient home improvements made this year may result in bigger tax savings next year.

The IRS encourages homeowners considering upgrades to their home or installing alternative energy equipment this summer to explore whether they qualify for any of these provisions.

“People can ‘go green’ and get a tax credit, with the bonus of having those energy-smart home improvements save them even more money in the future,” said Carrie Resch, IRS spokesperson.

One tax benefit allows homeowners a credit of 30 percent of the cost of qualifying improvements, up to $1,500. Qualifying upgrades include adding insulation, some roof improvements, energy-efficient exterior windows, doors and skylights, energy-efficient heating and air conditioning systems, and some water heaters, among other improvements. ARRA (The American Recovery and Reinvestment Act of 2009) raised the limit to $1,500 for improvements placed in service during 2009 and 2010 combined. The limit under an old law was $500.

ARRA also eliminated the dollar amount cap on the 30 percent tax credit for alternative energy equipment, such as solar water heaters, geothermal heat pumps and small wind turbines.

The law also increased the energy-efficiency standards for some products. Manufacturers must certify that their products meet the new standards and taxpayers should note that not all ENERGY STAR qualified products qualify for a tax credit.

Taxpayers should keep all documents relating to their home improvements with their tax information.

Visit IRS.gov for details on any of the energy-related provisions. For detailed information about qualifying improvements, visit the U.S. Department of Energy’s EnergyStar Web site and the EnergyStar Frequently Asked Questions site.