Energy Efficiency Projects Can Increase Your Tax Refund
If you took the initiative last year and performed energy-efficiency projects at your house, or even went the extra mile to put in solar panels or solar hot water heaters, you are by now reaping the rewards of lower energy bills and more money in your pocket each month.
If you did these projects, you may not know that these projects can save you even more money when you prepare your 2009 tax return this spring. President Obama and the Government have enacted several new credits this year that will result in bigger refunds.
The American Reinvestment and Recovery Act of 2009 (ARRA, better known as the Economic Stimulus), contains new or expanded tax credits for energy efficiency and renewable projects.
The Stimulus Bill contains provisions that provide for a uniform credit of 30 percent of the cost of qualifying energy efficiency projects, such as beefing up your insulation, or installing energy efficient windows or energy-efficient air conditioning or heating systems.
ARRA also increased the limit that can be claimed to $1500, up from $500 in the previous law, enacted in 2007. The law did increase the standards for what products qualify for the new credits, so make sure that the products you installed qualify under the new rules.
In addition to the credits for energy efficient projects, the law also increased the allowances for alternative energy installations, such as solar panels, solar hot water heaters, small wind turbines, and geothermal heat pumps. You are now allowed to credit 30% of the cost of these renewable systems, with no cap.
Tax Credits for Business Owners
If you are a business owner, you may not know that the tax credits for renewable energy projects do not only apply to individuals; credits can also be claimed by businesses.
Previously, the Government had allowed tax credits of 30% on the investment in renewable energy projects. ARRA now gives businesses three choices to claim incentives: the 30% energy investment tax credit, a production tax credit of up to 2.1 cents per kilowatt-hour (kWh), or a 30% cash grant. The grant can only be claimed on facilities that start construction by December 31, 2010, and these facilities must be in operation before 2014 or 2013 for wind projects.
So, if you have taken the time and spent the money to install energy-efficiency or renewable projects, make sure you get your full tax credit and get the biggest tax refund possible
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