By Johnny Jackson
Thinking green this year could save taxpayers hundreds of dollars in tax credits.
Taxpayers who make energy-efficient improvements to their homes can, for instance, receive upwards of $500 in tax credits this year.
They can take a credit based on what they spend on various energy-saving improvements they make to their homes, said Mark Green, spokesman for the Internal Revenue Service (IRS).
The improvements that qualify include; energy-efficient insulation, exterior windows, exterior doors, water heaters, heat pumps, central air conditioners, furnaces, and hot water boilers.
Such energy-efficient home improvements are becoming popular with consumers, according to Karen Cobb, spokeswoman for Lowe's Home Improvement Warehouse store.
"There has been a growing trend as energy prices have escalated the last several years," Cobb said. "Not only does it save energy, it saves money."
Cobb said the advertised energy-saving tax credits have served somewhat as selling point for associates at the home improvement retailer.
The types of energy-saving products range from compact fluorescent light bulbs to weather-proof doors. And many of them qualify for tax credits.
"The overall credit is limited to $500," said Green, of the IRS. "If you have to repair or replace an item that meets energy-efficient standards, you can take up to $500."
Further dollar limits apply to specific components, such as $200 for windows.
"The key is to keep your receipts and keep in mind that the limit is $500 [between 2006 and 2007] or for one of those years," Green said.
The energy-saving tax credit is a one-time credit that can only be taken for 2006 or 2007, or both, up to $500. That is, taxpayers who took the full credit in 2006, cannot claim the credit in 2007, even if they made qualifying energy-saving improvements that year.
There is also a credit worth 30 percent of the value of photovoltaic, solar water heating, and solar panels. The credit can be claimed on Form 5695.
Another energy-saving tax credit for hybrid vehicles, which was enacted by the Energy Policy Act of 2005, may be as much $3,400 for taxpayers who purchase fuel-efficient vehicles between Dec. 31, 2005 and Dec. 31, 2010.
"Taxpayers may claim the credit on their 2007 tax returns, only if the qualified hybrid vehicle - powered by both an internal combustion engine and a rechargeable battery - was placed in service in 2007," Green said.
Taxpayers, who buy hybrid passenger vehicles or light trucks in 2008, may also be entitled to a tax credit worth as much as $3,400 next year. But, they can claim the full amount of the allowable credit only up to the end of the first calendar quarter after the quarter the manufacturer has sold 60,000 vehicles. The tax credits will be phased out at that time.
The "alternative motor vehicle credit" amount varies, and may not be available, depending on the manufacturer, and when the vehicle was purchased.
The credit amount and purchase date limit for qualified hybrids can be found on the IRS web site. More information about the respective energy-saving tax credits may be found through manufacturers or home improvement retailers.
On the net:
Internal Revenue Service: www.irs.gov