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Your Income Taxes and Energy Credits

Many taxpayers know that the recent stimulus tax legislation included a provision for tax credits when you make energy saving improvements to your home. These credits are available for improvements made in both 2009 and 2010. But the part that some are not aware of is that these are “non-refundable” tax credits. This means that if you do not owe any tax, you do not get the credit. The credit offsets taxes you owe.

I work at several local locations as a tax prep volunteer for AARP Tax-Aide and we have had several taxpayers very disappointed that they could not claim the credit they were “promised” by a contractor, or thought they deserved.

Energy StarThe tax credits are available for a number of improvements to your ”principle residence,” that includes exterior windows and doors, roofs, insulation, heating, ventilating and A/C (HVAC) systems, and certain water heaters. The products must meet minimum “Energy Star” requirements set by the US Department of Energy. The credits for these types of improvements are for 30% of the cost, up to a combined total of $1500 for both 2009 and 2010. This program ends December 31, 2010.

There is another program for more advanced systems including Geothermal Heat Pumps, Small Residential Wind Turbines and Solar Energy Systems that also offers a 30% credit without an upper limit that extends until December 31, 2016.

There may be other programs offering energy credits and rebates, check with your local electric and/or gas utility companies. Also the State of Tennessee is planning to launch a rebate program for qualifying “Energy Star” heating and cooling systems on April 22, 2010.

More information on these and other tax saving programs is available on the IRS website at www.irs.gov or visit us at one of the local AARP Tax-Aide sites. For locations and times of operation for AARP Tax-Aide sites by zip code, call 1-888-AARP-NOW or visit us on the web at www.aarp.org/taxaide.

About Bob Willis

Bob Willis
Bob Willis

Bob Willis is a member of AARP Tennessee’s Executive Council and former state coordinator of the Tax-Aide program.

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