2010-11 Federal Economic Stimulus Package Energy Tax Credit
U.S. Federal Economic Stimulus Package Energy Tax Credit 2010-11
With the passage of President Barrack Obama’s Economic Stimulus Bill, many homeowners may be eligible for a federal tax credit if they purchase qualifying energy-efficient heating, ventilation and air conditioning (HVAC) systems, water heating equipment, or make any other energy-related improvements to their homes between January 1, 2009 and December 31, 2011.
Depending on the type of system or product you purchase, it is possible to qualify for a federal tax rebate of up to $500 on your 2010 or 2011 income tax return. Learn how the Government’s new Federal Economic Stimulus Package program works, which air conditioning and heating systems qualify, and how to apply for a tax credit by reading more below.
How did the energy tax credit come about?
On February 17th, 2009, President Barrack Obama signed the American Recovery & Reinvestment Act (also known as the Economic Stimulus Bill) into law. This legislation combines spending and tax incentives designed to get the American economy up to float again by investing in our Nation’s roads and energy infrastructure, and also by providing incentives for increasing the energy-efficiency and performance of America’s homes/commercial buildings.
Which air conditioning and heating systems are eligible?
- Split System Air Conditioning efficiency requirements – 16 SEER/13 EER (both efficiency levels must be met to qualify for the tax credit).
- Split System Heat Pump efficiency requirements – 15 SEER/12.5 EER/8.5 HSPF (all three efficiency levels must be met to qualify for the tax credit).
- Gas furnace qualifying levels – 95% AFUE.
- Packaged A/C, H/P, or Dual fuel products – 14 SEER, 12 EER, 8 HSPF.
- Maximum tax credit amount - $500. The legislation specifies 10% of the cost of qualifying equipment, including installation costs, subject to a $500 maximum per homeowner.
- The tax credit is only effective for all qualified hvac systems installed from 1/1/2009 through 12/31/2011.
- The Federal Tax Rebate is only valid for taxpayers that own their home and it is used as the principal residence.
How do I apply for the Federal tax credit?
For qualified energy-efficiency improvements, homeowners may be able to claim tax rebates equal to 10 percent of the installed costs (up to $500). The new tax credits are retroactive to January 1, 2009 and will expire on December 31, 2011. The $500 limit is for all energy-efficiency improvements made during the two-year term, rather than $500 each year.
The tax credit applies as a direct reduction of taxes owed. In the past, the IRS has directed taxpayers to use Form 5695 (the Residential Energy Efficient Property Credit). It is expected that the IRS will produce new rules related to the recently enacted economic stimulus plan legislation, giving taxpayers further guidance on claiming tax credits. To fully understand how the new tax credit may apply to you and what you can do to obtain one, you should consult with a federal tax professional for advice on tax preparation, as this tax credit is subject to IRS regulations.