Now that spring is almost here, there’s good news for those thinking about making energy improvements in the home. Not only will you see your utility bills go down, but with certain qualifying improvements in 2013, you may be eligible to claim up to $500 in tax credits on your 2013 federal income tax return.
In early January 2013, Congress passed the American Taxpayer Relief Act of 2012, which both rewards those homeowners who made qualifying energy improvements last year with a tax credit and encourages others to make improvements this year.
A tax credit is directly applied to your tax bill on your federal income tax form, using Form 5695. The credit is applied to the amount of the taxes you owe, reducing your tax bill. However, if your tax bill is zero, this particular tax credit will not mean you get a check from the IRS for the credit balance.
Even so, energy improvements still mean more green in your wallet.
More good news: Because Congress made those tax credits retroactive, qualifying improvements made in 2012 also apply.
One caveat: If you have ever claimed $500 or more in tax credits for energy-efficiency home improvements in previous years, you are not eligible for this tax credit.
To qualify for the home energy efficiency tax credits for 2012 and 2013, energy improvements must be made to your primary U.S. residence, “placed in service” (the date of installation, not the date of purchase) from January 1, 2012, through December 31, 2013, and be reasonably expected to last at least five years. While there are many eligible energy improvements that may qualify, here is the information specific to windows and doors:
The criteria for a window or door to be eligible for the tax credit is a window or door that meets the ENERGY STAR® Version 5.0 requirements in the climate zone where the product will be installed.
1. Tax credit is for the cost of the product only – the credit does not include installation costs.
2. Tax credit is 10% of the amount paid up to the maximums listed below.**
3. $500 total maximum tax credit for any and all improvements. (Including other eligible items as listed in the IRS Notice.)
- $200 total maximum tax credit for qualifying windows and skylights.
- $500 total maximum tax credit for doors if windows or skylights are not used.
4. If a combination of windows, skylights and doors are purchased, the total maximum credit is $500, of which $200 is the maximum allowable for windows and skylights.
5. The tax credit is an extension of the 2011 tax credit, which means all previous federal tax credits are a lifetime maximum credit. A homeowner who has already used up the $200 or $500 credit from the 2006/2007 and 2011 tax credit or the $1,500 tax credit from 2009/2010 is no longer eligible for this tax credit extension.
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* This is a summary of the tax credit elements related to windows and doors as set forth in the American Taxpayer Relief Act of 2012, which among other things, extends, with modifications, the tax credits in Section 25C of the Internal Revenue Code. Renewal by Andersen verifies only that its products with an ENERGY STAR label will meet the ENERGY STAR performance criteria for the particular climate zones indicated on the label. Renewal by Andersen bears no responsibility in validating or obtaining the tax credit and expressly disclaims any responsibility for determining whether a particular purchase or application qualifies for the tax credit. Further, Renewal by Andersen does not intend to and is not providing legal or tax advice and recommends that purchasers consult their own tax advisor or the IRS to determine whether the products they purchase for a particular application qualify for the tax credit.
Please consult your tax planner and review all IRS guidelines. Renewal by Andersen is not a tax advisor.
**These credits, which include the aggregate of all current and prior taxable years, cannot exceed the maximums listed for any taxpayer.
“ENERGY STAR” is a registered trademark of the U.S. Environmental Protection Agency. “Renewal by Andersen” and all other marks where denoted are trademarks of Andersen Corporation. © 2013 Andersen Corporation. All rights reserved.