We are thrilled to announce that Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) has joined forces with Bacchetta & Company in an exciting new partnership!
The Home Energy Saving Tax Credit Is Back
Article Highlights:
- Appropriations Act of 2020
- Residential Energy (Efficient) Property Credit
- Lifetime Credit
- Credit Limits
- Qualifying Property
- Per Item Credit Limits
- Basis Adjustment
- Retroactive Application
The Residential Energy (Efficient) Property Credit was initially introduced in 2006. The credit’s name is somewhat misleading, and the credit is best described as an energy-saving credit since it applies to improvements to the taxpayer’s existing primary home to make it more energy efficient. Over the years since it was first introduced, it has provided a tax credit in amounts varying from 10% to 30% of the cost of energy-saving devices installed as part of a taxpayer’s home, with the maximum credit ranging from $500 to $1,500. Currently, the credit percentage is 10%, with a lifetime credit amount limited to $500.
Since the credit currently has a lifetime credit of $500, that means if you have ever claimed this credit in the past, going all the way back to 2006, you must reduce any credit currently claimed, limited to the $500, by any credit amount you claimed in any prior year. As a result, taxpayers who claimed the maximum credit amount in the past won’t be eligible for any additional credit under this extension.
Generally, this tax credit equals 10% of the cost of the following energy-saving improvements that meet certain Energy Star requirements:
- An advanced main air-circulating fan;
- A natural gas, propane, or oil furnace;
- A natural gas, propane, or oil hot water boiler;
- Energy-efficient heat pumps;
- Energy-efficient water heaters;
- Energy-efficient central air conditioners;
- Insulation;
- Metal roofs with appropriate pigmented coatings;
- Asphalt roofing with appropriate cooling granules;
- Exterior storm windows and skylights;
- Exterior storm doors; and
- Others not listed here.
The credit is non-refundable, meaning it can only be used to offset your tax liability to bring it down to zero, and there is no carryover provision, so any portion of the credit not used in the year when the credit is earned is lost.
There are also credit limits for certain items:
- Qualified Windows and Skylights $200
- Qualified Advanced Main Air Circ. $50
- Qualified Hot Water Boilers $150
- Qualified Energy-Efficient Equip. $300
Retroactive Extension – Since this credit was retroactively extended to 2018, if you made qualifying improvements in 2018, you can amend your 2018 return and claim the credit. Since this credit has been extended through 2020, it can also be claimed for energy- efficient improvements made in 2019 and 2020 as long the $500 lifetime credit limit will not be exceeded.
If you have questions about this credit or think you might qualify for the credit in 2018 and want to see if the credit is worth the cost of amending your return, please give this office a call.
If you missed any of the earlier tax law change articles you can view those articles at the links below:
More About Us
Get to Know Prestige Accounting Services Group (previously Prestige Wealth Accounting Group)
Offices in Flemington, NJ and Califon, NJ
Our Mission: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we are on a mission to redefine the tax experience for individuals and small businesses. With a focus on personalized service, strategic planning, and expert guidance, we aim to empower our clients to succeed financially with confidence and ease.
Expertise in Action: With a wealth of experience and a team of dedicated professionals, we specialize in individual and small business tax preparation. While we excel in all areas of taxation, our passion lies in serving the unique needs of small business owners in New Jersey. We understand that small business taxation requires specialized knowledge and attention to detail, which is why we go above and beyond to ensure our clients receive the guidance and support they deserve.
Tailored Solutions for Every Client: Whether you're a high-net-worth individual seeking comprehensive tax planning or a small business owner in need of accounting and bookkeeping assistance, we have the expertise to meet your needs. Our team takes the time to understand your specific situation and develop customized solutions that align with your goals and objectives.
Why Choose Us?: What sets us apart from other New Jersey tax firms is our commitment to excellence and innovation in the field of taxation. We don't just prepare tax returns; we provide strategic insights, proactive planning, and actionable advice to help our clients achieve their financial goals. With a team of two CPAs, an EA, and an ERO, we have the expertise and resources to deliver exceptional service and results.
Your Success is Our Priority: At Prestige Accounting Services Group (previously Prestige Wealth Accounting Group), we measure our success by the success of our clients. We are dedicated to building long-lasting relationships, providing unparalleled service, and helping our clients thrive in today's ever-changing tax landscape.
We can't wait for you to experience the Prestige Accounting Services Group (previously Prestige Wealth Accounting Group) difference.
Tax & Small Business Updates
Get the latest in tax and small business updates and issues that affect your finances and growth prospects.