2013 Energy Credit Summary

After the long cold winter, there’s finally some good news for those thinking about making energy related home improvements. With the installation of Energy Star related products, you will not only see your utility bills go down, but with certain qualifying improvements in 2013, you may be eligible to claim up to $500 in tax credits on your 2013 federal income tax return.

Recently, Congress renewed the American Taxpayer Relief Act of 2012, which rewards  homeowners who made qualifying energy improvements last year with a tax credit.  (A tax credit is directly applied to your tax bill on your federal income tax form, using Form 5695. The credit is applied to the amount of the taxes you owe, reducing your tax bill. However, if your tax bill is zero, this particular tax credit will not mean you get a check from the IRS for the credit balance.  The only potential drawback is if you have ever claimed $500 or more in tax credits for energy-efficiency home improvements in previous years, you are not eligible for this tax credit.)

To qualify for the tax credits, energy improvements must be made to your primary residence, and “placed in service” (this is the date of installation, and NOT the date of purchase) from January 1, 2012, through December 31, 2013, and be reasonably expected to last at least five years.  While there are many eligible energy improvements that may qualify, here is the information specific to windows and doors:

Qualification:

The criteria for a window or door to be eligible for the tax credit is a window or door that meets the ENERGY STAR® Version 5.0 requirements in the climate zone where the product will be installed.

Limitations:

1. Tax credit is for the cost of the product only – the credit does not include installation costs.

2. Tax credit is 10% of the amount paid up to the maximums listed below.

3. $500 total maximum tax credit for any and all improvements. (Including other eligible items as listed in the IRS Notice.)

  • $200 total maximum tax credit for qualifying windows and skylights.
  • $500 total maximum tax credit for doors if windows or skylights are not used.

4.  If a combination of windows, skylights and doors are purchased, the total maximum credit is $500, of which $200 is the maximum allowable for windows and skylights.

5.  The tax credit is an extension of the 2011 tax credit, which means all previous federal tax credits are a lifetime maximum credit.  A homeowner who has already used up the $200 or $500 credit from the 2006/2007 and 2011 tax credit or the $1,500 tax credit from 2009/2010 is no longer eligible for this tax credit extension.

It is important to note that Richard Larson Buiilders, Inc is not a professional tax consultant.  Please consult your tax planner and review all IRS guidelines.