When people tried to make their home more efficient before the cold winter months arrive, they should not only focus on the immediate savings they will see on their energy bill. As autumn sucks the heat out of the year, realize that there are also tax breaks available for you if you create a more energy efficient home.
Every American taxpayer understands the concepts of deductions. These amounts of money, usually for things such as property tax and mortgage interest, reduce the amount of income that is actually taxable. The savings depend upon which tax bracket you fall in and are determined at various rates based on your itemized deductions.
Tax credits do not require itemization and function as a direct cut in the amount of money you owe on your taxes. There are two main credits that have to do with energy efficiency improvements you can make on your home.
Non-Business Property Credit for Energy
The Non-Business Property credit allows up to $500 over the course of your lifetime if you install energy efficient utilities or appliances in your home. It covers: new windows, doors, replacement roof and insulation as well. The credit is 10% of the cost of the things you installed. Windows, however only have a lifetime limit of $200 as a tax credit. The property where these products are installed must be in the United States.
In order to get the credit for these and other items, the product manufacturers must have the appropriate credit certification statement. These are usually displayed on their website, by the displayed in a store or attached to the product directly. If you do not see this document or certification when you are shopping, ask the retailer or manufacturer to make sure you are buying items that can help you receive your tax credit.
Originally, this property credit would have expired in 2011, but it was extended through 2013. Because it is unclear whether they will be extended a further into 2014, it is a good idea to go shopping soon and buy new windows or a roof for the holidays. The tax credit should motivate homeowners to make these larger ticket purchases.
Residential Energy Efficient Property Credit
This second energy credit has no spending limit and offers a larger 30% credit for any alternative power sources you place on your property within the United States. This includes wind turbines, solar power panels and solar hot water heaters. This generous credit can be carried over to future years if the amount is greater than your total tax bill during the year you purchase the system.
You may also be able to find rebates on alternative and renewable power source improvements from your state. Some also give out rebates for approved solar panel systems. With a combination of state rebates, lowering costs of solar panel installation and maintenance and the Federal tax credits, going green is becoming much more attractive.
Get Your Credit When Filing Your Taxes with TurboTax
Making the decision to file with TurboTax in 2017 is your key to making tax season less stressful. You do not have to be familiar with the tax code. Instead all you have to do is answer a few questions about your tax situation, have your information put on the correct tax forms, and TurboTax will bring to your attention the deductions and credits that you are eligible for.
This way you can keep more of your hard earned money. They even have a free tax calculator so you can see how much of a tax refund you should expect.