Time running out to earn tax credits on home energy improvements
From Staff Reports

Taxpayers may be eligible for tax credits of up to $500 if they've improved their home's energy efficiency this year.

But they better hurry since the improvements must be made no later than December 31.

"Improving a home's energy efficiency not only saves home owners money on heating and cooling bills but now they may realize the added benefit of a tax reduction," says Wayne M. Chisenhall, an Atlanta-based certfied public accountant.

Tax credits are available for a variety of energy related home improvements ranging from certain tank-less water heaters and heating and cooling systems to insulation and windows, among others.

Tax credits may provide home owners with more savings than a deduction because they directly reduce the tax itself, while a deduction reduces the amount of income subject to tax. Each dollar of credit will save a dollar of tax. However, the $500 is a cap that applies to energy related spending on a primary residence from January 1, 2006 through December 31, 2007 combined.

The Energy Policy Act of 2005 provides federal tax credits to consumers who purchase a qualifying furnace, water heater or boiler providing they were purchased no earlier than January 1, 2006 and no later than December 31, 2007.

A variety of natural gas water heaters, furnaces, etc. qualify under this program.

Other energy related items that may qualify for tax credits include insulation and doors and windows and even certain hybrid cars.

"Homeowners who think they may qualify should consult with a certified public accountant or tax planner and refer to the appropriate IRS rules to ensure that any credits taken are legitimate," says Chisenhall. The Treasury Department and the IRS have issued guidance (Notice 2006- 26) on the certification.

For a wide range of energyrelated topics from conservation and new technologies to generators and tax incentives, consumers can access www.energywizard.info for tips and submit energy related questions.