Energy Tax Savings- Get Rewarded for Being Green

May 22, 2017 by Ed Becker

Many Americans are concerned about saving energy and money, being more green or eco conscious is a perfect combination. Making green choices saves you money as you can claim energy tax credits. If you have made improvements to your home or purchased certain appliances that are energy star rated, you may have been able to take advantage of the credits on your 2016 tax return and are retroactive to 2015. If you missed the credit, but you invested a large sum, you may want to talk to your accountant about amending.

These credits expire this tax year:

Non-business Energy Property Tax Credit

Equipment and materials can qualify for the Non-business Energy Property Credit only if they meet technical efficiency standards set by the Department of Energy. The manufacturer can tell you whether an item meets those standards. For this credit, the IRS distinguishes between two kinds of upgrades.

The first is “qualified energy efficiency improvements,” and it includes the following:

• Home insulation
• Exterior doors
• Exterior windows and skylights
• Certain roofing materials

The second category is “residential energy property costs.” It includes:

• Electric heat pumps
• Electric heat pump water heaters
• Central air conditioning systems
• Natural gas, propane, or oil water heaters
• Stoves that use biomass fuel
• Natural gas, propane, or oil furnaces
• Natural gas, propane, or oil hot water boilers
• Advanced circulating fans for natural gas, propane, or oil furnaces
• Details of Nonbusiness Tax Credit
• You can claim a tax credit for 10% of the cost of qualified energy efficiency improvements and 100% of residential energy property costs. However, significant limits apply:
• This credit is worth a maximum of $500 for all years combined, from 2006 to the present.
• Of that combined $500 limit, a maximum of $200 can be for windows.
• The maximum tax credit for a furnace circulating fan is $50.
• The maximum credit for a furnace or boiler is $150.
• The maximum credit for any other single residential energy property cost is $300

Source:  Energy Tax Credit: Which Home Improvements Qualify

If you are planning to do improvements this year, it would be wise to talk to your accountant and  do some research on your own to see what credits or deductions you might qualify for on your 2017 tax return. There are still credits/deductions available for certain types of improvements.

Solar

• Panels, or photovoltaics, for generating electricity, used in the home.
• Solar-powered water heaters, used inside the home, and at least half of the home’s water-heating capacity must be solar. (Solar heaters for swimming pools and hot tubs do not qualify.

Wind turbines

• Wind turbines that generate up to 100 kilowatts of electricity for residential use.

Geothermal

• Heat pumps that meet federal Energy Star guidelines.

Fuel cells

• That rely on a renewable resource to generate power for a home. The equipment must generate at least 0.5 kilowatts of power.
• Even with the credits and deductions that expire this current tax year, the continuing credits are very generous for other alternative energy sources that you upgrade or install for residential use. 30% of the cost, including installation reduces your actual cost enough to make these types of energy sources more enticing and affordable.