Wind Energy Credits

Energy Credits - Continued

Wind Energy Credits

Energy from the wind has been around for centuries. Ships used to sail the ocean using the wind. It has been used to pump water in Holland where it helped keep the cities dry behind the dikes. Recently the wind has been captured to generate electricity.

You might be familiar with the Cape Wind project in Nantucket Sound and the battle that has been raging for years over whether or not it should be built. From a purely economic and energy perspective, it will help the Massachusetts economy and move us toward energy independence.

A few years ago I was traveling in the west and was awed by a wind farm that just appeared in the desert. There had to be a hundred or more windmills that did not desecrate the desert as far as I am concerned.

A tax credit is now available for small wind turbines that are used for a residence. Thus, you can install a wind turbine and get a credit for 30% of the cost of the unit. It can provide electricity for your house and could generate electricity that you might be able to sell to the electric company. The most common problem with wind turbines is having a site that gets enough consistent wind to justify the unit. A 30% credit is useless if you are limited in how much you can use the turbine.

Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.

Here are some links for you:

This link could help you understand wind energy for your home. Remember this is an industry group so all the downsides to wind energy may not be presented.
http://www.awea.org/faq/rsdntqa.html

Here is a site that could help you understand purchasing a wind system as well as other energy alternatives.
http://www.homepower.com/home/

Here is a link to a government website where you can search for grants.
http://www.grants.gov/

Substantial Energy Credits — Continued

Geothermal credits

Quote from the IRS…

“Residential energy efficient property credit. Beginning in 2009, there is no limitation on the credit amount for qualified solar electric property costs, qualified solar water heating property costs, qualified small wind energy property costs, and qualified geothermal heat pump property costs…”

Geothermal energy systems are based on the earth being a constant temperature once you get about 10 feet below the surface of the ground. If you can capture that heat, and run it through a heat exchanger, you can heat your home for essentially the cost of running a fan. You also can cool your home in summer with the same system and get hot water as a bonus. Couple it with a solar energy system to generate the electricity and you can substantially reduce your carbon footprint. It works best with a forced hot air heating system.

All in all this is not a bad deal.

Last year I talked with a company that installs residential geothermal energy systems. Part of my conversation with them was a question about tax credits and the response was “there aren’t any”. That changed in February when the stimulus package was signed. Now you can get 30% of the installation cost of a geothermal energy system back in the form of a federal tax credit. And there is no limit how much your credit can be. Just remember you still pay for 70% of the cost of the system.

Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.

Here are some links that explain more:

This one is from the Union of concerned Scientists:
http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-geothermal-energy-works.html

This is from Wikipedia:
http://en.wikipedia.org/wiki/Geothermal_heating

Here is a link to a government website where you can search for grants.
http://www.grants.gov/

There are plenty of additional links on Google or any other search engine.

New Solar Energy Credits

The new stimulus law has expanded the credit available for alternative energy improvements. This incorporates solar, wind, and geothermal investments. The credit is 30% of your cost for the systems. The tax credit can cover any home used as a residence by the taxpayer, but it does not have to be your principal residence. So your vacation home can qualify.

This blog will cover the solar credit which includes the generation of electricity, heating water, and some resources for information on solar power.

As I mentioned, the credit is 30% of the cost of the solar system. The system must be installed by December 31, 2016, so you have plenty of time to put the system in place. You can use it for generating electricity or hot water.

In addition many states offer a credit for energy improvements including solar power. Here is a link to a database that details these credits: http://www.dsireusa.org/

Try Wikipedia for some general information on solar power. Here is that link: http://en.wikipedia.org/wiki/Solar_power

The American Solar Energy Society is an industry association which provides information on solar energy. It has 12,000 members from solar professionals to grass root enthusiasts. They are located at http://www.ases.org/

You can Google “Solar Power” and get about 30,000,000 hits. That should keep you busy for the weekend.

Residential Energy Credits

Now you see them, now you don’t.  Wait!! Now you see them again.

Those elusive homeowner energy credits are back.  They were available until the end of 2007 and then disappeared in 2008 only to return with the various stimulus packages in 2009.

The energy credit is fairly simple:  You get a credit on your federal income taxes of 30% of the cost of qualified energy products you install in your home in 2009 and 2010.  Qualified products include new windows and insulation, as well as energy efficient heating and air conditioning systems.  The items installed must meet new higher standards of energy efficiency.  The credit applies to the cost of the product but not to the cost of labor for of the installation. 

The maximum total credit you can claim is $1500 (or 30% of $5000). The credit can be used only once, so you cannot claim $1500 in 2009 and then again in 2010. You file form 5695 with your 2009 or 2010 tax return.  This is not a refundable credit, which means that if you owe $1000 in income taxes and qualify for a $1500 credit, you will not get a check for $500 from the IRS.  It also cannot be applied to other taxes such as the self-employment tax.

The IRS has not provided a whole lot of guidance on this credit yet.   Based on various sources, the credit applies only to home improvements and not the construction of a new home.  Other details may change as the year progresses.

A final note:  The manufacturer must give you certification that the property satisfies the standards set in the new law.  Be sure to keep the certifications as well as the receipts for the cost of your products.

 

Energy TAx Credits

This blog is the start of a series on the energy tax credits enacted in February 2009.  I will be discussing the residential energy credits for insulation and new windows, a new credit for geothermal heating and cooling, solar credits, and even home sized wind turbines.  I will also discuss electric car credits.

Ah the wonders of the internet!!  This was posted from San Francisco

What Incredable Re=-Appearing Blog

Hi. I have been floored by a flu that might be lime disease With a little luck I will be functional again in a couple of days. This has just been a roller coaster of a sickness and is now headed toward 2 weeks. Seeing the doctor tomorrow. More later.

The Incredible Re-Appearing Blog

You may have noticed that the blog has been a bit erratic over the last few weeks. I was concentrating on my clients rather than you and then got hit by my annual post tax season cold the made my head even fuzzier than normal. Who knows what the blog might have said if I wrote it this last week. But I’m baaaaaaaaaack!

How about a few comments on the tax season.

It turned out to be a delayed rush this year. Many more of my clients showed up at the end of our deadline (March 15th) this year than last year. In case you are wondering, we need our clients tax information by March 15th to get the return completed by April 15th. What seemed to be happening was that no one wanted to open up their investment or retirement statements (I haven’t opened my since September) and then extended the practice to their " Important Tax Documents". Suddenly, with our deadline looming, people started opening envelopes and getting their information to us.

This was coupled with a new software program that had a learning curve that went straight up. It wasn’t until about March 15th that we felt comfortable with the program and this created a double whammy as March changed into April. Hectic would be a mild way to phrase it. Ah but I’m a loyal Red Sox fan. Wait until next year.

My conversations with my clients changed slightly during the course of the 3-½ months. In January and February it was hard to avoid doom and gloom. No one was spending any money, planning vacations or buying cars. Thus we have to bail out GM. March saw a slight positive movement. Some of my small business clients saw an increase in sales, admittedly from dismal numbers. My unemployed clients started to say that they could at least get their resumes out to people and maybe even connect up with a real person rather than the stone wall they were running into before. Are we out of the wood, no but it seems like the uphill climb is starting to get a bit easier.

The only good news that I can glean is that most of my clients are getting refunds rather than making payments this year. Of course this is because they lost money in the stock market in 2008 when then made big gains in 2007.

So I’m back at the keyboard and looking forward to an easier pace of work and blogging until January 1, 2010.