Thursday, February 10, 2011

NEW 2011 ENERGY TAX CREDIT RULES

Q. Are there any new rules on the purchase of energy saving items for my home?

A. The rules are stricter. You can claim a tax credit for energy saving home improvements you make this year, but the rules for 2011 are crazy.

• You can only claim a 10% credit for qualified energy property placed in service in 2011 up to a $500 lifetime limit (with no more than $200 from windows and skylights).

That’s not all…
• The credit you claim for any year can't exceed $500 less the total of the credits you claimed for 2006 through 2010.
• The amount you claim for windows and skylights in a year can't exceed $200 less the total of the credits you claimed for these items in 2006 through 2010.
• The credit is equal to the sum of: (1) 10% of the amount you pay for qualified energy efficient improvements (such as insulation, exterior windows or doors that meet certain energy efficient standards) installed during the year; and (2) the amount of the residential energy property expenses you paid during the year.

But that’s not all…
• There is a limit on the amount of “residential energy property expenses.”
• The credit for residential energy property expenses can't exceed: (A) $50 for an advanced main circulating fan; (B) $150 for any qualified natural gas, propane, or hot water boiler; and (C) $300 for any item of energy efficient property (advanced types of energy saving equipment, such as electric heat pumps, meeting specific energy efficient standards).

Final step: Then you divide the resulting number by your grandmothers age times you license plate.

Hey, just kidding about that final step. Who says accountants can’t make a joke.

Larry Kopsa CPA