Daylight savings time is ending: Save money with these energy tax tips
As the days draw shorter and Daylight Savings Time comes to an end, we're reminded that the end of the year is almost here.
As the temperature drops, you've probably already turned on the heat for the first time this fall (we just got our whole system serviced in preparation) and it's time to start thinking about energy bills. Winter is coming and you need to be prepared!
The good news about saving energy is that you can also save money at the same time and see a tax benefit. A few years ago, we replaced all the windows in our home because they were falling apart and leaking. We were able to leverage a tax credit to help defray the cost and reduce our energy bills. It was a win-win situation.
You want to do what you can to use less energy year-round, but especially during the winter. There are energy-saving ways to improve your home’s tax efficiency. The residential energy tax break is a credit available that you still have time to put into place before the end of the year and increase your tax refund:
Residential Energy Efficient Property Credit
This is a tax credit that can be quite valuable. You can receive 30% of the cost of alternative energy systems and equipment installed in your home. There is no limit on the credit, which means that you don’t have to worry about a cap.
It’s important to note that this credit isn’t refundable so you won’t get money back if the credit is worth more than what you owe. However, it is possible to carry the credit forward to the next year, so it isn’t wasted.
If you have a $2,000 credit, but only owe $1,500, you can apply the $1,500 this year, and then carry the remaining $500 forward, reducing your tax liability next year.
Qualified systems include solar cells, panels, and solar hot water heaters. Installation in your principal home and second home qualify just make sure that you check to see if the system meets the requirements.
Tax credits for Solar Energy Systems are available at 30% through December 31, 2019. The credit decreases to 26% for the tax year 2020, drops to 22% for the tax year 2021, and then expires December 31, 2021. The 30% residential energy efficient property credit for fuel cell property, small wind energy property and geothermal heat pump property expenditures expired December 31, 2016, and has not been extended.
Non-Business Energy Property Credit
The Non-Business Energy Property Credit for efficient improvements like insulation, doors, or water heaters used to be available, but expired on December 31, 2017, and has not been extended. At this time we don’t know if there are any plans to extend the tax credit, but similar to all tax laws, we will keep you updated with any additions or changes you need to know about.
Don’t worry about knowing these tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your entries.
If you have tax questions, you can connect live via one way video, on demand, to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. A TurboTax Live CPA or Enrolled Agent can even review, sign and file your tax return.
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