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Going Green May Reduce Your Taxes
When you invest in energy-efficient products, you may be saving
money on both your energy bills and your tax return. I thought you
should know about these six energy-related tax credits created or
expanded by the American Recovery and Reinvestment Act of 2009.
1.
Residential Energy Property Credit
This tax credit is for homeowners who make qualified energy
efficient improvements to their existing homes. This credit is 30
percent of the cost of all qualifying improvements. The maximum
credit is $1,500 for improvements placed in service in 2009 and 2010
combined. The credit applies to improvements such as adding
insulation, energy efficient exterior windows and energy-efficient
heating and air conditioning systems.
2.
Residential Energy Efficient Property
Credit
This tax credit will help individual taxpayers pay for qualified
residential alternative energy equipment, such as solar hot water
heaters, solar electricity equipment and wind turbines installed on
or in connection with their home located in the United States and
geothermal heat pumps installed on or in connection with their main
home located in the United States. The credit, which runs through
2016, is 30 percent of the cost of qualified property. ARRA removes
some of the previously imposed annual maximum dollar limits.
3.
Plug-in Electric Drive Vehicle Credit
ARRA modifies this credit for qualified plug-in electric drive
vehicles purchased after Dec. 31, 2009. The minimum amount of the
credit for qualified plug-in electric drive vehicles, which runs
through 2014, is $2,500 and the credit tops out at $7,500, depending
on the battery capacity. ARRA phases out the credit for each
manufacturer after they sell 200,000 vehicles.
4.
Plug-in Electric Vehicle Credit
This is a special tax credit for two types of plug-in vehicles —
certain low-speed electric vehicles and two- or three-wheeled
vehicles. The amount of the credit is 10 percent of the cost of the
vehicle, up to a maximum credit of $2,500 for purchases made after
Feb. 17, 2009, and before Jan. 1, 2012.
5.
Credit for Conversion Kits
This credit is equal to 10 percent of the cost of converting a
vehicle to a qualified plug-in electric drive motor vehicle that is
placed in service after Feb. 17, 2009. The maximum credit, which
runs through 2011, is $4,000.
6.
Treatment of Alternative Motor Vehicle
Credit as a Personal Credit Allowed Against AMT Starting in 2009, ARRA
allows the Alternative Motor Vehicle Credit, including the tax
credit for purchasing hybrid vehicles, to be applied against the
Alternative Minimum Tax. Prior to the new law, the Alternative Motor
Vehicle Credit could not be used to offset the AMT. This means the
credit could not be taken if a taxpayer owed AMT or was reduced for
some taxpayers who did not owe AMT.
So go green and save green at tax time!!!
Michael T. McCormick, JD, LL.M.
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