Scott's Comfort Cooline

The tax credit available under the new stimulus act is like money in the bank. It is a dollar for dollar credit, not a deduction that lowers your income. How do you qualify?

1. You must have taxable income. This usually means you have a tax bill for the year from income. This would include all taxes due, including those paid through payroll deduction.

2. You must not be subject to the AMT. Alternative Minimum Tax.

3. Your new equipment must be certified to meet the efficiency requirements. Not all Energy Star Rated equipment qualifies! The good news is the manufacturers provide a certificate stating which models qualify.

4. It must be installed in your primary residence. Second homes, rentals and business properties do not qualify.

Here’s how it would work. Your tax for the year is reduced by the amount of the credit. For example if you have a qualifying gas furnace installed for $3000, your credit would be 30% or $900. If you were going to owe $500 in tax, now you would get a $400 refund. If you were going to get a $800 refund, now you would get a $1700 refund.

But – the credit cannot reduce your tax below zero. If your tax bill for the year is $500 in the above scenario, and you had not paid any tax in, you would not get any refund check. You would no longer owe the $500, but no check. You could carry over the $400 to the next year.

As always, this blog is not tax advice. Always consult with your tax advisor before assuming you, or your equipment or your home qualfies!

It’s not too late to save on income tax bill for 2009. The stimulus package passed in Washington earlier this year contains tax credits for investing in energy savings for the home.

This is not meant to be exhaustive but here are some available credits. Also this is not tax advice – consult with your tax advisor.

There is a 30% tax credit for installing a qualifying furnace, air conditioner, heat pump or water heater in your primary residence, with a maximum credit of $1500. The $1500 maximum credit is for all qualifying  installations including windows, doors and insulation. The credit is good for property “placed in service” in 2009 or 2010.
Qualifying gas furnaces must be 95% AFUE (Annual Fuel Utilization Efficiency) or greater. Efficiency standards must also be met for air condtioners, heat pumps and water heaters. For more information on the credits and what qualifies go here:     http://www.energystar.gov/index.cfm?c=tax_credits.tx_index

Even better is the 30% tax credit with NO CAP! for geothermal, wind and solar. We have been installing geothermal since 1994 and it is by far the most efficient way to heat and cool your home. Geothermal is hot! We also have Solar Domestic Hot Water systems available. I don’t know much about wind systems except you need a tall tower and a lot of expensive gear to get good electricity production.