When updating your home's windows, save money and earn a tax credit through energy efficient options.
Saving energy benefits everyone, so the federal government works to encourage energy-efficient behavior. If you are considering installing windows, you may want to choose energy-efficient options. These not only save you money on your energy bills, but they may also earn you a federal tax credit when tax season rolls around.
Federal Credit
As of 2011, homeowners who purchase energy efficient windows can receive a tax credit of up to 10 percent of the cost of the replacement windows, not including any labor or installation costs. The limit on this credit is $200 for windows. Homeowners are also limited to claiming a lifetime maximum of $500 for all energy efficient improvements to their home, including the $200 maximum for windows. This is lower than the 2010 credit, which was 30 percent of the cost of the windows and up to $1,500 total for energy efficient repairs on the home.
Claim
If you purchased windows for your home in 2010 or 2011, save your receipts and the Manufacturer's Certification Statement, which is found on the windows. When you file your taxes, submit IRS Form 5695 with your 1040 form. You will claim the windows on line 52. Submit just the form with your taxes, retaining the receipts and Manufacturer's Certification Statement for your own records. The instructions are the same for both 2010 and 2011 tax returns.
Which Windows to Use
The windows that qualify for the 2011 tax credit must be Energy Star certified for the region in which they are installed. This is different from the 2010 requirement, which said the windows had to have a 0.3 U-factor and a 0.3 solar heat gain coefficient, which is information clearly marked on the windows. These windows can be purchased anywhere that sells energy efficient windows, and do not need to be installed by a professional.
Other Facts to Know
In order for the windows to qualify for either the 2010 or 2011 tax credits, they must be placed into use in that tax year. If they are purchased but not installed, they cannot be counted on that year's tax return. Also, the windows must be placed in the principal residence of the individual filing the taxes. This means they will not qualify for the credit if they are placed in a vacation home that is occupied only a few months or weeks out of the year. Similarly, if they are placed in a rental property that is not occupied by the individual filing the return, they do not qualify for the tax rebate.
Tags: energy efficient, 2010 2011, Certification Statement, efficient windows, energy efficient windows, individual filing, Manufacturer Certification
