How to Receive a Tax Credit for an Oil Hot Water Boiler

Government funding is available to help homeowners replace their old hot water boilers with energy-efficient, oil-fueled models. If your new oil hot water boiler is a government-approved energy-efficient model, you will be eligible for a sizable tax credit. The US government is distributing funds for this tax credit program to encourage the purchase of energy-saving "green" products.

Things You'll Need

• New oil hot water boiler (approved model)
• Receipt for new oil hot water boiler
• Manufacturer certification statement

Instructions

1. Become familiar with all of the advantages available to you when purchasing an energy-efficient oil-fueled hot water boiler. Buying a US government-approved energy-efficient model will save you more money in the long run. The American Recovery and Reinvestment Act of 2009 enables you to receive a tax credit up to a maximum of 30 percent of the total cost for your purchase. In addition to these savings you will also lower your monthly energy bills when using energy-efficient models. This 30-percent tax credit is limited to $1,500 per year. For example, products with a total cost of $400 will receive a tax credit of $120 (30 percent of $400). Any purchases that exceed $5,000 will be limited to a maximum tax credit of $1,500. If the total purchase is valued at $5,010, your tax credit will still be limited to $1,500.

2. Look for an energy-efficient, oil-fueled hot water boiler model that meets the criteria for a federal tax credit. Several Energy Star-rated products are not eligible to receive this credit. For a list of qualifying products, see Resources below.

3. Bring home your new energy-efficient, oil-fueled hot water boiler and install it as directed. Keep all of your receipts for tax purposes.

4. Look for the Manufacturer's Certification Statement. This statement will be included within the product instructions. The IRS recommends that this statement be kept with your other records of this purchase.

5. Complete and submit the necessary forms to receive your tax credit. Fill out IRS Tax Form 5695. These forms will be available by the end of the 2009 tax year. Claim your energy-efficient tax credit for your new oil-fueled hot water boiler when filing your yearly taxes. Tax credit benefits are preferred over tax deductions. A tax credit of $1,500 will actually lower your taxes by $1,500. Expenses eligible for a tax deduction of $1,500 will result in only a small portion of the $1,500 being returned to the consumer.

Tips & Warnings

• This energy tax credit replaces previous tax credits allowable as set in the Energy Policy Act of 2005. The old policy limited the energy-efficient tax credit to a maximum of $500. The new tax credit limit was increased to $1,500.

• This report is meant to serve as a general guideline. Always consult with a tax professional to receive the most up-to-date tax information.

Resources

• Energy Star Product Link
• Water Boiler Product Information
• IRS Information