It is closing in on income tax preparation time; some are stressed while others relish a return.
If you get significant dollars back annually, you might want to change your deductions. Basically, you are loaning your money interest-free to the government, and that amount monthly could better serve you in an interest-bearing account throughout the year.
This is a good time to clarify some of the home energy credits that you might be getting ready to include in your tax return. Congratulations on improving the efficiency of your home and saving a few dollars in the process.
Be sure you realize that the 30 percent tax credit was available only from 2009 through 2010, maxing at $1,500 cumulative not each year. Lets try it another way. You purchased perhaps $1,000 worth of energy efficiency supplies in 2009 and another $1,500 in 2010. Tax credit to your income tax will max at $1,500 total, so for 2009 you were able to apply $300 tax credit to your income tax. In 2010, you may also claim $450 off the taxes you might owe for 2010, presuming that you owed the government at least $450 when all was said and done.
Congress has now extended more credits to be available through Dec. 31, 2011, but theyre not as generous. Big items still eligible for tax credits (only up to the amount of your tax liability) include geothermal heat pumps, solar electric, solar water heating, and wind energy systems for tax credits at 30 percent of cost. Alternative fuel vehicles can also create a tax credit (www. fueleconomy.gov).
So if you didnt jump on the stick for those tax credits in 2009 or 2010 on your primary residence, there are still some opportunities for 2011.
There continue to be tax credits that will help to cover purchase costs for certain insulations, windows, doors, roofing, heating or air-conditioning systems. However, the grabber is that instead of the 30 percent tax credit, it is now 10 percent. Since you didnt take advantage of the tax credits for 2009 or 2010, the $5,000 you are going to spend on approved windows for 2011 will now allow you a $500 tax credit rather than that $1,500 tax credit of last year.
Also understand that the $500 tax credit is a now a lifetime tax credit. If you did use the tax credits in 2009 or 2010 in excess of $500, then you are done for 2011.
There are also now a few caps on specific tax credits. A couple of common ones are a cap of $200 total tax credit for exterior windows and $300 tax credit for a heat pump.
The other tricky piece is that the items must be purchased and installed by Dec. 31.
But do not expect to include the cost of the installation with your costs for any doors, windows, roof or insulation.
If you were able to understand the details here, congratulations. To say they are cumbersome would be an understatement.
firstname.lastname@example.org or 247-4355. Wendy Rice is family and consumer science agent for the La Plata County Extension Office.