Going Green Can Pay Big in Tax Credits, IRS Says

Going greenDid you know that if you replaced windows in your home with energy efficiency in mind, you may be able to claim a tax credit of up to $1,500? Or if you went – or are planning to –  “go solar,” there’s a tax credit equal to 30 percent of your cost.
Significant tax breaks are available for going green in the home, or with your car, through several credits tied to energy efficiency. Most of them are possible by new or expanded tax credits from the American Recovery and Reinvestment Act of 2009.
Many income tax filers are unaware of the full range of tax credits available for 2009 and the Internal Revenue Service wants to remind taxpayers that they still can claim some of them before Thursday’s deadline.
Here’s an overview of the energy-related tax credits:
Residential Energy Property Credit
If you made qualified energy efficient improvements to your existing home, you may qualify for a credit equal to 30 percent of the cost. The maximum credit is $1,500 for upgrades placed in service in 2009 and 2010 combined. It covers improvements such as “adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.”
Residential Energy Efficient Property Credit
Certain residential “alternative energy equipment”  – including solar hot water heaters, solar electricity equipment, geothermal heat pumps and wind turbines installed on or in connection with your home  –  qualify for 30 percent of the costs. This credit runs through 2016. The Recover Act removed previous annual dollar-amount limits for this credit. .
Plug-in Electric Drive Vehicle Credit
The Recovery Act modifies this credit for “qualified plug-in electric drive” vehicles purchased after Dec. 31, 2009. The minimum credit is $2,500 through 2014. The credit cap is $7,500, depending on the battery capacity.  The Recovery Act phases out the credit for each manufacturer that sells 200,000 vehicles.
Plug-in Electric Vehicle Credit
This tax credit focuses on two specific types of plug-in vehicles – certain low-speed electric vehicles and two- or three-wheeled vehicles. 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.
Credit for Conversion Kits
Going electric can earn you a substantial credit. This amount is equal to 10 percent of the cost of converting a vehicle to a “qualified plug-in electric drive motor vehicle” placed into service after Feb. 17, 2009. The maximum credit is $4,000 through 2011. 
Treatment of Alternative Motor Vehicle Credit as a Personal Credit Allowed Against AMT
The Recover Act now allows the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, to be applied against the Alternative Minimum Tax. Previously, the 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.” 
The IRS has set up a page on all of the Recovery Act’s tax credits.
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