Still Time To Claim Some Energy Efficient Tax Credits

This article is reprinted from simplesteps.org.

The Clock is Ticking on Energy-Efficiency Tax Credits

If you made improvements to your home in 2007 to make it more energy efficient, you may be eligible for a tax credit. The Energy Policy Act of 2005 encouraged homeowners to invest in cleaner technology and energy efficiency by offering credits of up to $500 for qualified insulation, replacement windows and doors, water heaters, and certain high efficiency heating and cooling equipment. Tax credits, unlike tax deductions, are as good as a rebate -- they come straight out of Line 46, the taxes you owe.

But the home improvements tax credit expired at the end of 2007. Despite soaring energy costs and concerns about global warming, the Senate has failed to pass legislation to extend the incentives.

Efficiency tax credits help consumers and businesses reduce their energy consumption immediately, reduce high energy bills, and drive down energy prices. Who could argue with that? Proposed incentives would save consumers a total of at least $50 billion and would reduce U.S. carbon dioxide emissions by 67 million metric tons annually by 2020. Extending tax incentives for multiple years, rather than just two more years, will spur development of even better clean energy technologies.

If you want to create some clean energy of your own, there's still time to install a solar energy system this year and claim a tax credit in 2009. You can get back 30 percent of the cost of qualified solar water heating and photovoltaic systems, up to $2000, until the end of 2008. The credit applies to second homes too.

You may also be eligible for rebates or other incentives from your state when you make energy-related improvements to your home. For state-by-state details, see http://www.dsireusa.org/

Learn more about qualified products and credits on the Energy Star website. Check out IRS form 5695 to learn how to claim residential energy credits.

And if you've got a new hybrid parked in the driveway, don't forget to claim your tax credit. The alternative motor vehicle credit is available for certain hybrid, alternative fuel, and fuel cell vehicles purchased new in 2007 for business or personal use. Credits for purchasing a hybrid vary widely, depending on the fuel-efficiency of the vehicle and on whether the manufacturer has sold its 60,000th vehicle. Use Form 8910 if you purchased your vehicle for personal use and form 3800 if it was for business purposes.

Check with your accountant or the IRS website for full details on these tax credits.