Too Hot? Here’s Some Cool Cash

Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.

Remember, the $1,500 tax credit for home-energy improvements is still available for this tax year. If your A/C system is on its last legs and just not doing the job efficiently, let Uncle Sam help you replace it.

This tax break had its origins in the 2005 energy bill, but back then the tax credit was much smaller and
more complicated. In 2009, as part of the ‘American Recovery and Reinvestment Act,’ improving your
home’s energy level got easier and more tax beneficial.

Now qualified residential energy efficient improvements will get you a tax credit of up to 30 percent of those costs, maxing out at $1,500.

Note, however, that this credit was available last tax year, too. So if you claimed the maximum tax credit on your 2009 return, you don’t get additional tax breaks for 2010 upgrades.

On the other hand, if you claimed just a portion of the credit or didn’t claim any energy tax credit at all on your 2009 return, you can claim the balance for the 2010 tax year to get to the $1,500 limit.

Upgrades that count include adding insulation, energy efficient exterior windows and energy-efficient heating  and air conditioning systems.

More complex and expensive energy operations, such as assorted solar, wind and geothermal systems, also offer a credit of 30 percent. In these cases, there is no dollar cap. And for your home energy upgrade planning purposes, these types of improvements are tax credit eligible through 2016.

Get more details from Form 5695 (instructions are on pages 3 through 5), as well as the Energy Star website.

Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.