Energy efficient tax credits for 2011

If you installed energy efficient equipment or made improvements in your home in the past years, you can claim energy efficient tax credits. The best way to find out if an energy efficient improvement product qualifies is to check the manufacturer’s tax credit certification statement. It can be found on the manufacturer’s website or with the product packaging. These credits will reduce the amount of tax owed, dollar for dollar. They can be claimed regardless of whether you itemize Schedule A deductions or not.

Energy efficient tax credits can be claimed for:

(A) Energy efficient improvements

The 2011 tax credit for energy efficient improvements are 10% of the cost (up to $500). Qualifying improvements include:

1.       adding insulation,

2.       energy efficient exterior windows and doors,

3.       energy efficient roof,

4.       high efficiency heating and air-conditioning systems,

5.       water heaters, and

6.       stoves that burn biomass fuel.

Installation Costs:

Installation costs for (1), (2), and (3) should be excluded from the calculation of this tax credit. Installation costs for (4), (5), and (6) can be included for the calculation.

(B)  Alternative energy equipment

The alternative energy equipment tax credit is 30% of the cost of the qualified property. It runs through 2016 and there is no limit on the amount of credit available.

The alternative energy equipment that qualifies is:

1.       solar water heaters,

2.       solar electricity equipment, and

3.       wind turbines.

Installation Costs:

Installation costs can be included to calculate the credit and any unused portions of the credit can be carried forward.

Refer  Form 5695, Residential Energy Credit