6 Ways to Save More Than $12,000 on Taxes in 2009
A look at the new renewable energy and energy efficient incentives for individuals
By Dan Shapley
Updated: 10/20/2008 2:26:17 PM
It’s been widely noted that the passage of the financial bailout bill included $150 billion in additional “sweeteners” to gain passage in the House of Representatives. It’s true that only in Washington could the solution to an overly expensive bill be an even more expensive bill, but it’s also true that one of the provisions – energy efficiency and renewable energy tax credits – was among the important sweeteners to win passage.
The tax bill is filled with important incentives that will keep the solar and wind power industries competitive, and that means they should continue to innovate, producing more power at ever more affordable prices. That’s critical for the U.S., and the world, as we confront the challenge of global warming.
But what about homeowners and other regular taxpayers? There are several important provisions anyone can take advantage of:
1. $500 for energy efficiency
If you can, wait until Jan. 1 to install new insulation, energy-efficient windows or an energy-efficient furnace, boiler or air conditioner.
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A tax credit of up to $500 that expired in 2007 has been renewed for 2009. It covers up to 10% of the cost of a range of projects that meet certain specifications. Do $5,000 worth of qualifying work, and you not only get a $500 rebate, but also savings on energy bills for years to come.
Why wait? Of course, the heating season begins before Jan. 1, giving homeowners facing a northern winter reason to invest now – but because Congress let the tax credit lapse, work done in 2008 doesn’t qualify.
Also note these important limits, which cap the amount you can claim for any particular project:
– Windows: $200
– Exterior doors, roofing or insulation: $500
– Most heating, ventilation and air-conditioning improvements: $300
– Furnaces or hot water heaters: $150
Remember, your overall tax credit is capped at $500, so if you install $5,000 worth of exterior doors and $2,000 worth of new windows, for a total of $7,000, you can still only claim $500 – even though 10 percent of all qualifying work equals $700. Also, the tax credit applies only to equipment, not labor.
Find more information at the Alliance to Save Energy or Energy Star or Department of Energy Web sites. Note that much of this information reflects the tax incentives in place in 2006 and 2007; for the most part, the 2009 tax credits are identical, but updated criteria for which products qualify, for instance, will be published soon.