How to Claim the Residential Renewable Energy Tax Credit

An energy tax credit was included as part of the stimulus bill that was passed by the legislature. The actual name for it is the Residential Renewable Energy Tax Credit. The bill allows a tax credit of up to thirty percent of the total installed cost of a renewable energy system up to a limit of $4000 for residences. A renewable energy system includes things like wind turbines, solar panels or geothermal heat pumps. A tax credit is not a payment to you like a rebate, it is a credit against your tax liability. If you do not owe any taxes you will not benefit from this energy tax credit. The process of claiming it is part of your personal income tax filing. The things that you will need to do are outlined below.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• long form 1040
• form 5695

1. 
    

   Purchase your renewable energy system from a recognized dealer in renewable energy. They will be able to tell you if the system that you wish to purchase qualifies for the energy tax credit.

2. 
    

   Maintain all of the paperwork for the purchase and installation of the system. Also insure that you maintain all of the information from the manufacturer. If you are audited this will be your proof that you installed a qualified system.

3. You will need to claim the energy tax credit on your 2009 income tax if you purchase it in 2009. It will also be available in 2010. In order to claim it, you will need to file the long form for your taxes and include form 5695 as part of your filing. The form is fairly straightforward. The amount that you spent will be used to directly offset the taxes that you owe.

Tips & Warnings

• Some states have implemented rebates for certain renewable energy systems. Check to see if your state is offering any type of energy tax credit or rebate for your chosen system.
• It is always best to consult a tax professional to see how this will impact your accounting.

Resources

• eHow Going Green Guide
• Database of state incentives for renewables

[compgeek]

on 7/28/2009 Good stuff, many sites online also, you may not find a solar panel installer in your phone book.. be sure you get references of installs. I personally am holding out until the new flexible solar panels come out, it will be super flat and its flexible and can be rolled up, litterally you will be able to roll it out on the roof, and the cost is going to be so cheap it will make it so affordable everyone will go solar.

P.S this is iowac on twitter.

[roseanne09]

on 5/20/2009 great article!!! 5Stars

[timbucktoo]

on 4/25/2009 Nice tip. It's good to know you can get a break on the bill while helping the planet at the same time.