So you’re slaving away on that tax form that’s due April 15, and you’re wishing you had done something — anything — in 2009 that could have eased the financial pain inflicted by your Form 1040.
Sorry, can’t help you there.
But there’s a rather long list of home improvements you could make in 2010 that not only have the potential to reduce your monthly utility bills — they also could put a dent in your taxes.
They are tax credits that homeowners can get through a federal stimulus package passed last year.
In particular, the Existing Home Retrofit Tax Credit covers an array of energy-saving fix-ups — from installing certain kinds of windows to powering your house with a windmill — that qualify for a credit, according to Calli Schmidt, environmental communications director for the National Association of Home Builders.
The tax credit for many of the energy-saving changes could be good for as much as $1,500, she said. If you want to upgrade your heating or cooling or switch to alternative forms of energy, the potential tax credits can go much higher.
Five things to know about the home-improvement tax credits:
1. The simplest changes that qualify for the credits involve buying and installing approved products that improve the energy performance of the home itself, such as insulation, insulated siding, doors and windows, some types of roofing and skylights, and others.
The credit for these products is 30 percent of the cost (but doesn’t include the cost of installation), up to $1,500. NAHB materials explaining the tax credits offer a typical example: Upgrading inefficient insulation (from R-19 to R-38) in the attic of a two-story, 2,000-square-foot-house in Chicago might cost about $1,000, but the tax credit would reduce the cost to $700.
2. If you go the second route and install a new furnace, air conditioning, tankless hot-water heater, heat pump, geothermal system, biomass heater, or solar or wind installation, the credits could go much higher.
Again, the credit amounts to 30 percent of the purchase cost, but there’s no dollar cap on these, she said. A big-ticket example: Spending $25,000 for a rooftop solar-heat panels would net a $7,500 tax credit.
3. "In addition to the federal incentives, many utilities and municipal, county and state governments are also offering incentives for buying and installing certain products," Schmidt said.
For example, New Mexico offers tax credits to help cover of the cost of installing geothermal heat pumps; Indiana offers credits for qualified water heaters, furnaces, central air conditioning and programmable thermostats.
A state-by-state guide to these tax credits and other incentives is at the Database of State Incentives for Renewables & Efficiency.
4. The federal offering isn’t a tax deduction (which whittles down your taxable income), but a credit — which reduces the actual taxes you owe Uncle Sam. It applies only to your principal residence, not to vacation homes.
Being a tax law, of course, it has myriad details and exclusions. To file for the credit you’ll need Internal Revenue Service form 5695; you’ll also need to hang on to both the itemized product-purchase receipts and the labels from those products.
The credit also could apply to home improvements you may have made in 2009, so if you did some fix-ups last year that improve your home’s efficiency you might be able squeeze them into your last-minute IRS filing or consider an amended return if you’ve already filed. Again, however, documentation is critical.
5. For further information on the tax credits, you can visit EnergyStar.gov. The homebuilders also have details at NAHB.org/efficiencytaxcredit.
Mary Umberger is a freelance writer in Chicago.
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