If you paid to make your home more energy efficient in 2013, you may be able to get a residential energy credit on your income tax return this year. The American Taxpayer Relief Act of 2012 extended energy incentives for American taxpayers who made improvements through December 31, 2013. Use IRS Form 5695 to claim energy credits on your federal income tax return in 2014 for improvements made in 2013. Here’s how.
What Home Improvements Qualify for Energy Credits?
There are two types of home improvements you can claim for this tax credit:
- Non-Business Energy Property. These are permanent improvements that become part of your home, like insulation, doors, windows and your roof. They save energy by making your home more sealed up and therefore less loss of heat or cool air (if you’re in the South). This type of credit expired at the end of 2013.
- Residential Energy Efficient Property. This is for alternative energy improvements to your home. For example, maybe you installed a solar hot water heater. That may qualify, if it’s certified. It’s basically equipment that you install, as opposed to improvements described above, which are just replacements of older things. This type of credit is available through the end of 2016.
For the Residential Energy Efficient Property credit, there is no limit on the credit. However, if the credit you’re getting is more than the tax you owe on your tax return, the overage just gets applied to next year’s tax bill, and then the next, until it’s used up. In other words, you won’t get any money back from the IRS, just money taken off your bill. It’s like getting store credit instead of a refund.
For the Non-Business Energy Property credit, there is a lifetime maximum of $500, and only $200 can be used for windows.
For both types of energy credits, use IRS Form 5695 to claim the credits. You can get it here on the IRS website. The form can be used for all sorts of energy credits, from electric vehicles to a new energy efficient roof for your home. The credits are only for a home that’s in the United States.