Don't Miss Energy Tax Credits for 2011

2011’s federal energy tax credits of up to $500 for various home improvements include items such as: 

• Heating, ventilation, air conditioning

• Insulation

• Roofs (metal and asphalt)

• Water heaters (non-solar)

• Windows, doors, and skylights

• Storm windows and doors

The energy tax credits are small, but a credit is better than a deduction. With a credit, you get a dollar-for-dollar reduction in your tax liability. If you get the $500 credit, you pay $500 less in taxes. Deductions just reduce your taxable income.

There are some important things to know about these credits. There can be limits on energy tax credits. Certain systems are capped below $500. And installation is not always covered.

How can I claim the 2011 energy tax credit?
1. To determine if the system you’re considering is eligible for the credits,  go to Energy Star’s website for detailed descriptions of what’s covered. Then talk to your vendor.
2. Make sure to save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
3. Make sure to provide this information to your tax professional, or file IRS Form 5695 with the rest of your tax forms in 2012.

You should consult a tax professional for tax advice, and remember that tax laws may vary by jurisdiction.