The US government provides tax credits on many instances. These tax credits reduce the total amount of tax incurred. So, it is important to opt for tax credits if you are eligible. One such instance where tax credits are given is when you are incorporating energy efficient systems in your household. Electricity generation with non-renewable means have proven to be costly and the resources getting exhausted is a real threat to energy production. Therefore, the government is encouraging people to seek renewable means for their energy needs. As an initiative for this venture, the government is giving incentives in terms of tax credits.

What Does An Energy Tax Credit Cover?

For renewable energy sources such as solar, wind and geothermal, you can get tax credits. Similar to other credits you can get a return of 30% for the systems you have installed. Except for fuel cells, there is no upper limit for the return amount. For fuel cells, there is an upper limit of $1000 per kilowatt of capacity. Apart from these energy source systems, home appliances were also considered for tax credits till 2010. But it is not applicable now. You can look into IRS guidelines for more information on credits for appliances.

Similar to home appliances, energy efficient windows are also eligible for credits. If you had such windows installed between 2012 to 2016, then you are qualified for getting tax credits for those windows. Also, you can get them for your primary house where you are staying and not for other houses you own. You should have a certification of proof that they are energy efficient for those windows. If you meet all the requirements, then you can get 10% of the total cost of windows and the upper limit is a return of $200 only. If you had doors, you can get a $500 return.

How To Claim?

It is easy to claim your energy tax credit through online filing systems. After getting an energy efficient system to you home, you can fill up the Form 5695 through online portals and you can claim your energy tax credit. These credits apply only the following year after the installation. Most of the energy source improvements can be claimed for credits for your primary and a secondary house only. Fuel cells installation is credit eligible only for one primary house.

These are the information you need to know about tax credits for energy efficient improvements done for your household. It is recommended to do these improvements so that you can cut down on electricity charges as well as save the environment from pollution. Also, along with an added advantage of getting tax credits.