The goal of the American Recovery and Reinvestment Act tax credits is to both stimulate the economy by encouraging homeowners to complete energy-efficient upgrades and to save energy by requiring high-efficiency equipment and products.
Tax credits have been offered by the federal government in past years, but the new legislation provides for a higher credit amount and an expanded list of improvements.
For expenditures on improvements such as insulation, windows, doors, water heaters, furnaces, and air conditioners that meet specific efficiency standards, the 30% tax credit is limited to a $1,500 maximum for all improvements combined for tax years 2009 and 2010.
A few points:
If a taxpayer’s tax liability is zero — that is, he does not owe taxes — he can carry the credit amount forward to a year when he does owe taxes.
A taxpayer must file a 1040 form to claim the credit. You cannot claim the credit if you are filing a 1040EZ tax form.Taxpayers paying the Alternative Minimum Tax (AMT) can apply the credit against the AMT, but only in 2009.
According to the IRS, the credit must be claimed in the year that the homeowner made the expenditure for the improvements.
The credit is applied to the taxpayer, not to the property. So the $1,500 credit applies to improvements on any residences owned by that taxpayer.
READ entire article to learn more detail.
Source: Remodeling magazine June 2009 by Nina Patel.
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