Energy and Energy usage has been essential issues for many years worldwide. How energy is produced, and its conservation are vital concepts that governments are trying to solve by having the less possible impact on the environment.
It is relevant to mention that conserving energy might help the US to minimize the dependence on foreign oil supplies, as well as, to protect the environment and save the country a lot of money in this area.
The federal government offered tax credits to those who purchase energy- efficient appliances as a way of conserving energy at home. Energy Start program began in 2012 functioning as it does today. However, it almost expired for the credit used for residential electricity.
At the beginning of this policy, the tax credits were destined for energy improvements for existing homes. So loans were limited to purchases made between 2006 and 2007. What is more, there was an aggregate cap of $500 for all purchases. In addition to this, there were individual caps for a variety of equipment types. The possibilities of accessing to this kind of credit
By 2009, the credits were reinstated, and some minor changes were implemented in connection with credit extension, and the amount of cap increased to $1500. From this time onwards, credits are renewed several times over the years.
The Energy Star program has been functioning since 1996; it has the aim of promoting home and business energy efficiency. It might help you to lower the high amount of money you have to pay for each bill and to improve the energy efficiency at home.
As stated in its webpage, this program has approved products such as windows, heating, among others so as the homeowners might be able to save billions of dollars and also to avoid greenhouse gas emissions which is terrible for the environment and human beings.
Qualified Equipment to Access the Energy Tax Credits
The alternatives for qualified equipment may vary, but there are some useful options to have at home. For instance, solar-powered units that generate electricity, energy-producing wind fan, and geothermal heat pumps.
This type of credit is exclusively for improvements that you might require for your home. If you are planning to include some of these benefits to other properties you have, that would not be accepted as part of the credits.
When installing any of the already mentioned energy equipment at home, you can access a credit equal to a 30% of your total cost. Thus, the credit is available until the end of 2019 so, then the percentage of the price will decrease each year, and it will stop at the end of 2021.
Some Equipment: Heating, Cooling, and Water-Heating
Those people who purchase qualified residential energy-efficient appliances are eligible for tax credits and credits are equal to the full cost of the equipment.
Costs might be around these amounts:
- Air circulating fan: $50
- Natural gas, propane, or oil furnace: $150 to $300
- Electric heat pump water: $300
- Central air conditioner: $300
- Biomass stoves that use “plant-derived fuel available on a renewable or recurring basis: $300
To have a previous idea on the prices would be an advantage for you when doing your taxes. You can find online the complete list of elements that are taken into account to reduce your taxes and to protect the natural world.
How to Claim for Energy Tax Credits on your Tax Return
To claim the credit is not a complicated task. However, there are specific steps and papers to complete and submit in order to get it. It might be important to remember that you can get your taxes reduced the energy tax credit but you cannot get money back under no circumstances.
For example, if you have $2,200 and your credit is $3,400, you will get $2,200 this year. Nevertheless, if the credit involves heat pumps and turbines, the remaining money can be continued the following year.
In order to demand the credit, you would need the IRS Form 5695. After that, you will have to figure out the credit amount on the form so to enter it on your 1040. When you complete all forms, you have to keep the receipt for the appliance and the Manufacturer’s Certification Statement, in this way, you can prove that your claim was legitimate in case the state asks for more information or they need to see the papers.
Although it seems to be a complicated matter and that you should do many things at the same time, It can be said that at the end it is worthly. Firstly you are going to contribute the environment, and you will get a reduction in your taxes by resorting to protect and regulate the energy- efficiency at home.