Tax day 2013: Saving energy can save you money on taxes
As tax day 2013 approaches, look for tax savings from energy efficiency. Energy-saving appliances are more prevalent than ever. Making your home more energy efficient can generate tax credits come tax day.
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Congress extended federal tax credits for energy efficiency in early January. That means homeowners can earn as much as $500 per year for investments in energy-saving windows, water heaters, air conditioners, and a host of other home improvements.
"Rest assured, if you’re doing something that’s uniquely beneficial for the environment, there's likely a tax credit there," says Mark Steber, chief tax officer at Jackson Hewitt Tax Service, a tax-return preparation firm headquartered in Parsippany, N.J.
The savings aren't enormous, but they're easy to come by. Energy-efficient appliances are more prevalent than ever, and many homeowners may own more than they even realize.
"You'll have a hard time finding a non-energy-efficient water heater out there these days," Mr. Steber says. "You buy a water heater – you’re probably going to qualify."
As April 15 quickly approaches, consider the following:
What qualifies for energy efficiency tax credits?
Insulation, windows, and furnaces are among the most common home improvements that qualify for tax credits, according to Steber. Air-conditioning, water heaters, and roofing are also on the list. For more advanced energy enthusiasts, solar power systems, geothermal heat pumps, and residential wind turbines also qualify. The improvements must have been made in 2012, but Steber notes that it's possible to amend tax filings as far back as 2009 for earlier purchases. Energy Star has a detailed online breakdown of what appliances qualify and for how much.
How much can I earn?
For simpler items, homeowners can receive a tax credit for 10 percent of the cost up to $500 or a specific amount from $50 to $300. Solar power systems, geothermal pumps, and other more advanced items are eligible for a tax credit of 30 percent of the cost with no upper limit until Dec. 31, 2016.
What forms do I need?
Homeowners will need to submit a 5695 form with their 2012 taxes to receive these tax credits. No receipts? No problem, says Steber. Credit card statements, bills, and other evidence of the purchase can serve as adequate documentation.
What about state tax credits?
The Department of Energy maintains an online database of energy tax credits, rebates, and other savings that can be sorted by state.