Question #1: If I make energy efficient upgrades to a rental property will they still qualify for the federal tax credit?
Unfortunately, the IRS will only allow you to claim the federal tax credit for energy efficient improvements made to your primary residence. Therefore, rental properties or summer homes will generally not qualify.
Question #2: I just realized I made a mistake on my federal tax return, how do I correct it?
The IRS released a new press release recently, discussing tax options for first-time homebuyers. Check out the text of the release below.
As part of the Treasury Department’s consumer outreach effort and with the April 15 individual tax filing deadline approaching, the Internal Revenue Service today began a concerted effort to educate taxpayers about additional options at their disposal to claim the new $8,000 first-time homebuyer credit for 2009 home purchases. For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.
The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.
“The new credit can get money in the pockets of first-time homebuyers quickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.”
First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.
The filing options to consider are:
File an extension. Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.
File now, amend later. Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.
Amend the 2008 tax return. Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.
Claim the credit in 2009 rather than 2008. For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.
The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.
From Newsday.com:
The city is urging New Yorkers to claim the new Child Care Tax Credit when filing their taxes this season.
More than 50,000 New Yorkers claimed the credit last year, the first year the city credit was available. Mayor Michael Bloomberg's office says the average refund was $600.
Residents who earn $30,000 or less and pay child care expenses for children age three and under may qualify for the credit.
The mayor is urging families to call the city's information hot line, 311, to find out more information.
From CNNmoney.com:
The financial crisis has opened a void in financing for renewable-energy projects as troubled investment banks have pulled back, potentially providing opportunities for smaller banks, investment funds and utilities as new government backing for clean energy starts to flow.
Some non-traditional firms are expected to step up their investment in renewable-energy projects, which had been dominated by big players like Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM) and Morgan Stanley (MS). But money hasn't come fast enough for many developers of wind, solar and other clean-energy projects, which are scrambling to secure funds, even as the U.S. government promises a flood of money in the hope of kick-starting investment in a sector seen key to rejeuvenating the economy and weaning the country off of fossil fuels.
Lending was fluid when the banks had large balance sheets and could make use of a 30% renewable energy investment tax credit. The banks would invest in clean-energy projects in exchange for the developing company's tax credit and a related tax write-off called accelerated depreciation, but as losses have mounted, the big investment banks still standing have cut back on their tax- equity financing.
This has hurt companies like OptiSolar and eSolar, privately held solar power developers in California that have had to sell their project development businesses due to a lack of financing.
From BusinessWeek.com:
Consumers who order or purchase a new 2010 hybrid vehicle from Ford Motor Co. by the end of March are eligible for a tax credit, the company said Wednesday.
Purchases or orders of new Ford Fusion and Mercury Milan hybrids made by March 31 will qualify for a $3,400 credit on their 2009 tax returns.
The company unveiled its hybrid version of the Ford Fusion last November that can go up to 47 miles per hour on battery power alone. The Fusion gets 41 miles per gallon in the city and 36 mpg on the highway.
The Ford Escape and Mercury Mariner hybrids are still eligible for a $3,000 tax credit. The credits vary due to the performance of the vehicle. The Escape and Mariner get 34 mpg in the city, and 31 mpg on highways.
Ford said its Fusion hybrid would be in showrooms by March 31, but did not offer pricing details. Consumers have shied away from the electric-gas combo cars as gas prices have fallen rapidly since last summer, as the cost savings deteriorated.
According to the auto Web site Edmunds.com, hybrid sales plunged 43 percent in December and 50 percent in November, surpassing the industry's overall sales decline of 36 percent in December and 37 percent the month before.
Fusion and Milan hybrids purchased between April 1 and Sept. 31 are eligible for a $1,700 credit. The tax credit drops to $850 for purchases between Oct. 1 and March 31, 2010. The credit drops over time because Ford has more than 60,000 hybrid vehicles on the road, and tax regulations state that the credit must be phased out after that threshold is met.
"The whole idea is to encourage early adopters," said Ford spokeswoman Jennifer Moore.
New Ford hybrids purchased on or after April 1, 2010 will not be eligible for a tax credit.
The Roni Deutch Tax Center® recently published a press release titled "Tax Lady" Educates Taxpayers on 10 "Green" Tax Credits and Deductions for '08 and '09 Tax Years, so I wanted to also make sure and share them with the readers of my blog. Check out the top 10 tips below!
Although gas prices have dropped over the past few months, going “green” and helping to improve the environment is still at the top of everyone’s mind. Additionally, the federal government also offers a wide variety of energy efficiency related tax credits to help encourage taxpayers to “go green.”
1. Hybrid Vehicles
Eco-friendly automobiles are more than good for the planet. They are good for your wallet! In fact, buying any hybrid vehicle can earn you a tax break of anywhere between $200 and $3,500. Both the weight of the vehicle and how much gasoline it saves affects how much of a break you will receive, so be sure to do your research before making any large purchases!
2. New Roof
Investing in a new energy-efficient roof is a great way to save money, help the planet, and put value into your home all at the same time. Energy-efficient roofs come in a variety of materials and types, but the most common would be a metal roof. To be sure your roof is as efficient as it can be, look for the energy star, as energy star products are the most efficient. Investing in a new roof can also give you up to $500 in tax credits.
3. Solar Panels
Solar panels and photovoltaic systems are smart, clean, and inexpensive products that can make up for their own cost in very little time. You can also receive huge tax breaks for installing a working solar panel system, or photovoltaic system. For installing either, you can receive a deduction for up to 30% of the total cost.
4. Fuel Cells
There is a consumer tax credit for installing fuel cell and micro-turbine systems, as long as they meet the government’s qualifications. The credit is for 30% of the total cost, up to $1,500 for each half kilowatt.
5. Bio-Diesel
Similarly to hybrid vehicles, you can reap huge benefits from driving a vehicle powered by bio-diesel. In fact, you can actually receive more federal benefits for having a bio-diesel vehicle than a hybrid, and some states even offer state tax breaks for bio-diesel powered cars.
6. Energy Efficient Appliances
There are dozens of tax incentives for a wide array of appliances for your home or office, as long as they were manufactured in the past 3 years, and meet “efficiency” qualifications. These appliances include, but are not limited to, dishwashers, refrigerators, and clothes washers.
7. Business Credits
You can get business tax credit for providing an earth-friendly work environment. Whether it means having one or more hybrid vehicles for company cars, or simply purchasing energy-saving appliances. You can also receive tax credits for having your office or business in a building that follows certain energy efficiency guidelines.
8. Wind Energy
You can receive a 30% tax credit for the cost of a wind energy system once you have installed it. You can also get up to $4,000 of additional credits depending on how many kilowatts of electricity you produce, at $500 for each half kilowatt.
9. New Windows
Purchasing double paned or energy efficient windows for your home will keep the cold air out and the warm air in. Likewise with the summer, your home will stay cool and comfortable with this impressive addition. Although you hardly need more incentive, installing energy efficient windows can also provide you with a tax credit of up to $200.
10. Plug-in Hybrids
Effective January 1, 2009, there will be a huge new tax incentive for the first 250,000 plug-in hybrid vehicle buyers. The buyers will receive a credit from $2,500 to $7,500 for both cars and trucks following the plug-in hybrid standards, depending on the capacity of the vehicle’s battery.
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