Energy Credits for 2011 taxes are not very exciting

As 2011 starts closing in, I've been getting a number of requests for an update on just what credits are available for taxpayers in 2011 relative to Residential Energy. All of these credits are NON-refundable, meaning that they will only REDUCE your income tax owed. If you had no income tax, you get no credit.

The limits for 2011 are drastically less than previous years, and I think many people may wonder 'why bother?' if you're paying someone to prepare your tax return, particularly if there's nothing to be obtained at the end of all this.

For 2011, there is now a $500 lifetime cap, which is retroactive to 2005. So, if you had credits for 2005-2010 that totaled $500 or more, there are no credits available to you in 2011.

Not disqualified yet? Read on..A homeowner making improvements to an existing primary home can get a credit for 10% of the costs, capped at $500 total, subject to limits.

• Replacement of heating and cooling system, or gas, oil, propane or electric heat pump for a maximum credit of $300.
• A qualified Furnace or boiler for a maximum of $150.
• Advanced Main Air Circulating Fan of $50
• 10% of the Materials ONLY Cost for Insulation
• 10% of the Materials ONLY cost of an asphalt or metal roof designed to reduce heat gain.
• 10% of the cost of exterior windows, doors or skylights, BUT windows are maxed at $200.

To be clear, the maximum credit you can get on your tax return is $500. Also, be sure to discuss this with your contractor, since there are tougher qualifying standards, relative to how much it improves energy efficiency.

A manufacturer’s certification should be obtained and kept as ‘proof’, just like you would a receipt. You must make sure that the certification statement is for the 2011 credit and not the old credit. So watch out for purchases of a clearance item or an item at an overstock store. To make things even more confusing, taxpayers will no longer be able to rely on the Energy Star Label.

If you think you might qualify for some of these expenses, make sure you get your receipts and certifications together now, since these types of expenses are coming up fairly often now on personal tax return audits. Call me if you'd like to discuss further.

Steven A Feinberg, CPA of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, has more than twenty five years experience in Federal and New Hampshire issues, specializing in small business general, tax and payroll matters. For additional information on these and other current business and tax issues, email Steve at info@appletreebusiness.com or call (603) 434-2775.

Steven A. Feinberg - www.AppletreeBusiness.com - Get Appletree Blog via Email!