The IRS Explains: Seven Facts about the Nonbusiness Energy Property Credit

Posted on November 13, 2009 by Stacie Clifford Kitts

Taxpayers who take energy saving steps this year may get bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes has been increased as part of the American Recovery and Reinvestment Act of 2009.
Here are seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:

The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.

To qualify as “energy efficient” for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers’ Website.

Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.

The improvements must be made to the taxpayer’s principal residence located in the United States.

To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.

Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.
For more information on this and other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/recovery.

Links:
Energy Incentives for Individuals in the American Recovery and Reinvestment Act
IR-2009-98, Expanded Recovery Act Tax Credits Help Homeowners Winterize their Homes, Save Energy; Check Tax Credit Certification Before You Buy, IRS Advises
YouTube Video: Home Energy Credits: English Spanish ASL
Audio File for Podcast: Home Energy Credits: English Spanish

Filed under: CLEAN ENERGY PROJECTS, TAX CREDITS | Leave a Comment »

Check Tax Credit Certification Before You Buy

Posted on November 11, 2009 by Stacie Clifford Kitts

Home Energy Video: English Spanish ASL
Audio File for Podcast: English Spanish
Video: Money in Your Pocket

WASHINGTON — People can now weatherize their homes and be rewarded for their efforts. According to the Internal Revenue Service, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well.
The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit.

Nonbusiness Energy Property Credit
This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit
Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax he or she owes. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions on Schedule A. Use Form 5695, Residential Energy Credits, to figure and claim these credits. A draft version of this form is available now on IRS.gov.

Filed under: CLEAN ENERGY PROJECTS, IRS PATROL, TAX CREDIT CERTIFICATION, TAX CREDITS | Leave a Comment »

Treasury Allocates $2.2 Billion in Bonds for Renewable Energy Development

Posted on November 5, 2009 by Stacie Clifford Kitts

WASHINGTON–As part of the Obama Administration’s efforts to spur renewable energy production, the U.S. Department of Treasury announced the allocation of $2.2 billion in Clean Renewable Energy Bonds (CREBs) for 805 recipients across the country. Funded by the Energy Improvement and Extension Act of 2008 and the American Recovery and Reinvestment Act of 2009 (Recovery Act), these energy bonds help government agencies, public power providers, and cooperative electric companies obtain lower cost financing for clean energy development projects.

“The Recovery Act’s innovative bond programs provide communities around the country with financing to jump start important development projects,” said Treasury Deputy Secretary Neal Wolin. “Because of the Clean Renewable Energy Bonds awards announced today, energy developers will be able to access lower cost credit to help make the shift to clean renewable energy production, benefitting both our economy and our environment.”

The Treasury Department allocates bond authority to governmental agencies, public power providers, and cooperative electric companies involved in clean renewable energy development and production. The application deadline for the new CREBs allocations was August 4, 2009, with recipients being announced today. These bonds function as tax credit bonds which allow investors to receive federal tax credits in lieu of the payment of a portion of the interest on the bond. For CREBs, the federal tax credits will cover 70 percent of the interest on the bonds.

A complete list of recipients receiving awards of bond authority to issue CREBs can be found here.

Filed under: CLEAN ENERGY PROJECTS, IRS PATROL | Leave a Comment »

Treasury News Release -$500 Million in Recovery Act Awards for Clean Energy Projects

Posted on September 1, 2009 by Stacie Clifford Kitts

WASHINGTON– Marking a major milestone in the effort to spur private sector investments in clean energy and create new jobs for America’s workers, Treasury Secretary Tim Geithner and Energy Secretary Steven Chu today announced $502 million in the first round of awards from an American Recovery and Reinvestment Act (Recovery Act) program that provides cash assistance to energy production companies in place of earned tax credits. The new funding creates additional upfront capital, enabling companies to create jobs and begin construction that may have been stalled until now.

“The Recovery Act is investing in our long-term energy needs while creating jobs in communities around the country,” said Treasury Secretary Tim Geithner. “This renewable energy program will spur the manufacture and development of clean energy in urban and rural America, allowing us to protect our environment, create good jobs and revitalize our nation’s economy.”

Said Secretary Chu: “These grants will help America’s businesses launch clean energy projects, putting Americans back to work in good construction and manufacturing jobs. The initiative will help double our renewable energy capacity over the next few years and make sure America leads the world in creating the clean energy economy of the future.”

Created under Section 1603 of the Recovery Act, the program is expected to provide more than $3 billion in financial support for clean energy projects by providing direct payments in lieu of tax credits. These payments will support an estimated 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities in all regions of the country over the life of the program. As a result of this first round of funding, more than 2,000 Americans will have access to jobs in the renewable energy industry – both in construction and in manufacturing – while moving the nation closer to meeting the Administration’s goal of doubling renewable energy generation in the next few years.

The Treasury Department opened the application process for the 1603 program on July 31, 2009 and is today making the first awards in half the statutorily mandated turnaround time of 60 days. The following is a chart of projects funded as part of today’s announcement. Additional awards under the program will be announced in the coming weeks.

Movement Gym PV System (Solar), Boulder, CO, $157,809

Solaire Development, LLC Danbury, CT, $2,578,717.00

Evergreen Wind Power V, LLC, Danforth, ME, $40,441,471

Moraine II Wind Farm, Woodstock, MN, $28,019,520
NY
Canadaigua Power Partners, LLC (Wind), Cohocton, NY, $52,352,334

Canadaigua Power Partners II, LLC (Wind), Cohocton, NY, $22,296,494

Wheat Field Wind Farm, Arlington, OR, $47,717,155.00

Hay Canyon Wind Farm, Moro, OR, $47,092,555

Pebble Springs Wind Farm, Arlington, OR, $46,543,219

Highland Wind Farm, Salix, PA, $42,204,562

Locust Ridge II, LLC (Wind), Shenandoah, PA, $59,162,064

Penascal Wind Farm, Sarita, TX, $114,071,646

Total Amount $502,637,546

Filed under: AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009, CLEAN ENERGY PROJECTS | Leave a Comment »

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