Tax

Tax Technology

Residential Energy Tax Credits for 2012

Summer’s here and if you’ve been thinking about “going green” and making your home more energy efficient, then there’s no time like the present, especially if you take advantage of residential energy tax credits still available to homeowners.

The Residential Energy Efficient Property Credit is available to individual taxpayers to help pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and residential wind turbines. Qualifying equipment must have been installed on or in connection with your home located in the United States.

Geothermal pumps, solar energy systems, and residential wind turbines can be installed in both principal residences and second homes (existing homes and new construction), but not rentals. Fuel cell property qualifies only when it is installed in your principal residence (new construction or existing home). Rentals and second homes do not qualify.

The tax credit is 30% of the cost of the qualified property, with no cap on the amount of credit available, except for fuel cell property.

Generally, labor costs can be included when figuring the credit. Any unused portions of this credit can be carried forward. Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.

What’s Included in the Tax Credit?

    • Geothermal Heat Pumps. Must meet the requirements of the ENERGY STAR program that are in effect at the time of the expenditure.

 

    • Small Residential Wind Turbines. Must have a nameplate capacity of no more than 100 kilowatts (kW).

 

    • Solar Water Heaters. At least half of the energy generated by the “qualifying property” must come from the sun. The system must be certified by the Solar Rating and Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling. Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.

 

 

    • Solar Panels (Photovoltaic Systems). Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.

 

    • Fuel Cell (Residential Fuel Cell and Microturbine System.) Efficiency of at least 30% and must have a capacity of at least 0.5 kW.

 

We’re happy to help you sort out the tax credits available for your “green” home improvements this summer. Give us a call or email us today!

Tax

Injured or Innocent Spouse Relief: The Facts

You may be an injured spouse if you file a joint tax return and all or part of your portion of a refund was, or is expected to be, applied to your spouse’s legally enforceable past due financial obligations. Here are seven facts about claiming injured or innocent spouse relief.

1. To be considered an injured spouse you must have paid federal income tax or claimed a refundable tax credit, such as the Earned Income Credit or Additional Child Tax Credit on the joint return, and not be legally obligated to pay the past-due debt.

2. Special rules apply in community property states. Give us a call for more information about the factors used to determine whether you are subject to community property laws.

3. If you filed a joint return and you’re not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation, which may be filed electronically with your original tax return or by itself after you receive an IRS notice about the offset. If you need assistance with this, please call us.

4. If you are claiming innocent spouse relief you must file form 8857, Request for Innocent Spouse Relief. This relief from joint liability applies only in certain limited circumstances. However, in 2011 the IRS eliminated the two-year time limit that applies to certain relief requests.

Are you an injured or innocent spouse? Call us. We’ll make sure you get the relief you are entitled to.

Tax

Managing Tax Records After You File

Keeping good records after you file your taxes is a good idea, as they will help you with documentation and substantiation if the IRS selects your return for an audit. Here are five tips to keeping good records.

1. Normally, tax records should be kept for three years.

2. Some documents, such as records relating to a home purchase or sale, stock transactions, IRAs, and business or rental property, should be kept longer.

3. In most cases, the IRS does not require you to keep records in any special manner. Generally speaking, however, you should keep any and all documents that may have an impact on your federal tax return.

4. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.

Call us today if you need more information on what kinds of records you should keep and for how long.

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