Home Energy-Efficiency Improvement
How To Use The $1,500 Energy Tax Credit
What is a tax credit? You don't receive an income tax credit when you buy the product, like an instant rebate. You claim the credit on your federal income tax form at the end of the year. The credit then increases the tax refund you receive or decreases the amount you have to pay.Tax credits vs. tax deductions: In general, a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions - such as those for home mortgages and charitable giving - lower your taxable income. If you are in the highest 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the value of a tax deduction. But a tax credit reduces your federal income tax by 100 percent of the amount of the credit
What do I need to do to get the tax credit? You will need to file IRS Form 5695 with your taxes. In addition, you will need to keep at least receipts proving that you purchased the improvements and a copy of the manufacturer's certification. Accountants and tax advisors should also be able to provide more guidance.
SUMMARY:
- Keep receipts showing proof of purchase
- Get a copy of the manufacture's certification
- File IRS Form 5695 when filing your Federal Tax Return
Please note: We at Caledonia Windows are experts at installing and servicing energy efficiency windows, not taxes, and we do not provide tax advice; you may want to consult a tax professional.
