Please note, not all ENERGY STAR products qualify for a tax credit. For detailed
information about qualifying improvements, visit the U.S. Department of Energy’s
EnergyStar Web site and the EnergyStar Frequently Asked Questions site.
• Nonbusiness energy property credit is extended, but with new limitations for 2011.
• A total combined credit limit of $500 ($200 limit for windows) for all tax years after 2005.
• For 2011 a maximum credit for residential energy property costs of $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace, or hot water boiler; and $300 for any item of energy-efficient building property.
• The credit applies to:
• Qualified energy efficiency improvements such as adding insulation, energy-efficient exterior windows and doors, and qualifying metal or asphalt roofs (does not include labor costs for onsite preparation, assembly or installation)
• Qualified energy efficiency improvements such as energy-efficient heating and air conditioning systems. For a complete list of items see Form 5695. (includes labor costs for onsite preparation, assembly, or original installation)
• The improvements must be made to the taxpayer’s principal residence located in the United States (must be existing home).
• Qualifying improvements must be placed into service by the taxpayer during 2011.
• Expenditures which are made from subsidized energy financing cannot be used to figure the credit.
• The credit is taken on Part I, Form 5695. See Form 5695 and Instructions for more information.
• If the total of non business energy property credits the taxpayer has taken in previous years (after 2005) is more than $500, the taxpayer cannot take the credit in 2011.
Part II, Form 5695 - Key points about the Residential Energy Efficient Property Credit:
• This information is provided as awareness in order that volunteers can identify when the issue is out of scope.
• This credit is taken on Part II, Form 5695. This part of the form is out of scope for return preparation in the volunteer program. Taxpayers that have expenses for the following items should be referred to a professional tax preparer.
• The credit is available to help individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, geothermal heat pumps and wind turbines.
Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the product packaging or in a printable
format on the manufacturers’ Web site. Taxpayers should keep a copy of the manufacturer’s certification statement and receipts with their other important tax records.
Residential Energy credits 2011
From: Volunteer Tax Alert (VTA) – 2010-05 February 1, 2010, Documentation Required to Determine Eligibility for Certain Tax Benefits
There are two kinds of property for this credit. Here are some key points to consider:
§ Qualified energy efficiency improvements include insulation, exterior windows, exterior doors, and metal roofing. Products must meet certain requirements. Does not include installation costs.
§ Qualified residential energy property includes certain water heaters, heat pumps, air conditioners and other items specified in the instructions to Form 5695. Products must meet certain requirements. Installation costs are includable.-(This is out of scope for AARP Tax-Aide)
For property purchased before June 1, 2009, return preparers can rely solely on the manufacturers’ certifications and Energy Star labels provided by the taxpayer to determine that the purchase qualifies.
o Manufacturers have been advised that they should not continue to provide certifications for property that fails to meet the new standards. The IRS has issued Notice 2009-53 that will allow manufacturers to certify that their products meet the new standards. Please note, not all ENERGY STAR qualified products qualify for a tax credit. For detailed information about qualifying improvements, visit the U.S. Department of Energy’s Energy’s EnergyStar Web site and the EnergyStar Frequently Asked Questions site.
.Volunteer return preparers may not accept the taxpayer’s oral or written statement regarding the eligibility and amount of their purchase. The taxpayer must provide documentation including manufacturers’ certifications, Energy Star labels, and receipts. The preparer should use these documents in conjunction with the resources listed above to determine eligibility.
Note: Residential Energy Efficient Property Credit (Form 5695 Part II) is complex and therefore out of scope for the VITA/TCE program.