Help The Environment and Help Your Tax Bill With the Energy Tax Credit
Written by Karin Velez

The American Recovery and Reinvestment Act provides incentives for taxpayers to purchase energy efficient appliances and upgrades to their homes. The Act increases the energy tax credit for homeowners who make energy efficient improvements to their homes and taxpayers who purchase certain energy efficient equipment or vehicles.

How Much of an Energy Tax Credit Can I Get?

The amount of the energy tax credit depends on what you purchase. The Act allows for a credit on 30% of the purchase price of all energy efficient improvements to your residence up to $1500. This applies to improvements like adding insulation, replacing windows and installing energy-efficient heating or air conditioning systems. Additionally, certain alternative energy systems, like solar hot water heaters and wind turbines, are eligible for a 30% energy tax credit for the cost of the equipment with no limit.

The Act also creates a special energy tax credit for certain plug-in, electric low-speed vehicles and two- or three-wheeled vehicles. The credit for these vehicles is 10% of the purchase price, up to $2500. Certain vehicle conversion kits also qualify. These vehicles must have been purchased after Feb. 17, 2009. The more credits you qualify for, the greater your chances of receiving a refund on your tax return.

How Do I Know if My Purchase Qualifies for the Energy Tax Credit?

For items purchased before June 1, 2009, you generally can rely on the manufacturers' certifications and Energy Star labels that were available at the time for those products. Not all Energy Star products qualify for an energy tax credit, though. Visit the U.S. Department of Energy's EnergyStar Web site to check on your specific products. For alternative energy systems, check the IRS website for qualification guidelines.

How Do I Claim My Energy Tax Credit?

To claim your energy tax credit, you must file IRS Form 5695 with your personal income taxes. Using an online tax preparation site, like www.efiletaxreturns.com, will help you tax as many deductions and credits as are allowable. It will also help you take whatever multiple credits you may qualify for when claiming electric or hybrid vehicles.

What Other Credits are Available for Energy-Efficiency?

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