Taxation & Estate Planning

Save Energy, Save Tax

By Darrin Mish

If you want to find a way to save on your taxes and the cost of energy, the government has made it possible. In a move that kills these two birds with one stone, legislators have enacted a law that allows you to make improvements to your home that will save you money in energy costs and slash your tax bill at the same time. And the fall is the best time to act on this.

Most Americans will start preparing for winter soon by buying certain items like heaters, insulation, lighting, stoves and so on. If you are one of those doing so, do not forget that you have certain entitlements under the American Recovery and Reinvestment Act (ARRA) 2009. This was introduced by the government as part of efforts to reduce energy consumption, preserve the environment, ?go green? and reduce dependence on fossil fuels.

Under the ARRA, taxpayers can claim 30% of costs incurred when purchasing and installing items such as energy efficient heating and air conditioning, biomass-burning stoves, water heaters etc up to $1,500. This can be offset from your combined 2009 and 2010 tax bills and comes under the non business energy property credit. Certain other energy saving expenses qualify for cost of purchases but not installation deductions, such as installing insulation, energy efficient windows, doors and skylights.

There are other benefits the ARRA offers. Another benefit is the residential energy efficient property credit that offers a tax deduction of 30% of expenses made on buying certain property items like wind turbines, solar water heaters, geothermal heat pumps, electric systems and so on. This credit is given even longer, from 2009 to 2016 and there is no ceiling on the amount of the 30% except if you buy fuel cells.

With such an incentive to save energy, you should take full advantage of the tax credits to make purchases on items that will reduce your energy consumption. The savings on cost of energy saved and the tax credit would in most cases more than compensate for the amount spent on the purchases of such items in the long run. You only have to make sure that the items you intend to purchase qualify as purchases that earn the tax credit. To do that, consult a tax professional like a tax lawyer or accountant. You could also log in to http://www.irs.gov to check before making your purchases.

Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.

Save Energy, Save Tax is a post from: IRS Tax Problem Solver Blog - IRS Help

Full post as published by IRS Problem Solver Blog on December 19, 2009 (boomark / email).