Who can claim the credits?
Home energy credits provide an incentive for homeowners to buy and install energy-efficient products in their home. Credits are available for homeowners of residential energy efficient property placed in service in 2012.
Home energy tax credits are nonrefundable, which means they cannot reduce the amount of taxes you owe to less than zero.
What energy improvements qualify?
Not all energy-efficient improvements qualify for these credits. The equipment and materials you install must meet the requirements of the U.S. Department of Energy. Check for the manufacturer’s tax credit certificate or statement for qualifications.
The IRS cautions that some manufacturer certifications may be different from the department of Energy’s Energy Star Label because the rules changed recently. Verify your qualifying equipment at the U.S. Department of Energy’s Energystar web site.
There are two parts to the credit. Your energy saving improvements may qualify under the Nonbusiness Energy Property Credit or the Residential Energy Efficient Property Credit. TurboTax helps you determine which credits you may qualify for.
Nonbusiness energy property credit
This is for homeowners installing energy efficient improvements such as insulation, new windows and doors, and furnaces. All improvements must be installed on your existing principle home in the U.S. that you live in. The credit is more limited than in past years, but still provides tax savings for equipment such as:
- Biomass stoves
- Heating, ventilating, air conditioning (HVAC)
- Roofs (metal & asphalt)
- Water Heaters (non-solar)
- Windows, skylights & doors
The 2012 credit can be up to 10% of the cost of these energy improvements. The credit has a lifetime limit of $500. If you had nonbusiness energy property credits in prior tax years going back to 2005, the total credit for all years cannot exceed $500.
In addition, windows are limited to only $200 of the credit. Other limits also apply, see the IRS instructions for 5695.
Residential energy efficient property credit
This is intended to increase use of alternative energy equipment in your principal residence and second home in the U.S. Qualifying equipment includes:
This credit can be 30% of the cost of qualifying property. For 2012, fuel cell property has a limit on the credit based on the kilowatt capacity. For more details, see see the IRS instructions for 5695 and at the U.S. Department of Energy’s Energystar web site.
Where do I enter my energy improvements for the credit?
- Select the Federal Taxes tab (Personal tab in Home & Business product).
- Then choose Deductions & Credits and click on Explore on My Own.
- Scroll down to Your Home, and on the Home Energy Credits line, click the Start/Update button.
- Answer the interview questions and enter information about your energy equipment.