Residential Energy Tax Credits

Residential Energy Tax Credits

If you have made energy saving improvementsto your home in 2016, you may be able to take residential energy credits to reduce your income tax due.

The Residential Energy Efficient Property Tax Credit

You may be able to take a tax credit equal to 30 percent of the amount paid for residential energy efficient property during 2016.

Residential energy efficient property includes:

  • Qualified solar electric property
  • Solar water heating property
  • Small wind energy property
  • Geothermal heat pump property
  • Fuel cell property (limited to $500 for each one-half kilowatt of capacity of the property)

This tax credit is limited to your tax liability, any unused portion of the tax credit can be carried forward to 2017.

The Non-business Energy Property Tax Credit

You may be able to take a credit equal to the sum of:

  1. 10 percent of the amount paid for qualified energy efficient improvements installed during 2016, and
  2. Any residential energy property costs paid in 2016.

Qualified energy efficient improvements includes:

  • Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home when installed in or on such a home
  • Exterior windows and skylights
  • Exterior doors
  • Any metal roof with appropriate pigmented coatings or asphalt roof with appropriate cooling granules that are specifically

This tax credit is limited as follows:

  • A total combined credit limit of $500 for all tax years after 2005.
  • A combined credit limit of $200 for windows for all tax years after 2005.
  • A credit limit for residential energy property costs for 2016 of $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property.

This tax credit is limited to your tax liability, any unused portion of the credit cannot be carried forward to 2017.

We have qualified professionals to assist you on identifying and claiming these tax credits. For more information on tax strategies that may benefit your business, contact a Smith Schafer professional today. Click here to start the discussion. We look forward to speaking with you soon. 

Also published in:

Minnesota Electrical Association Newsletter

Education Tax Credits

Education Tax Credits

Are your kids going off to college?

College is more expensive than ever, but there are two education tax credits to help offset the costs of college by reducing the amount of income tax you owe.

1. The American Opportunity Tax Credit

  • You may claim up to $2,500 per student per year for the first four years of school as the student works toward a degree.
  • Forty percent of the credit (up to $1,000) is refundable. The other 60 percent is nonrefundable. The credit is limited to the amount of tax you must pay on your taxable income.
  • This may be used toward tuition, fees, books, supplies and equipment.
  • The full credit is available to individuals, whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. You cannot claim the credit if your modified adjusted gross income is $90,000 or more ($180,000 or more if you file a joint return).

2. The Lifetime Learning Tax Credit

  • You may claim up to $2,000 per student per year for any college or career school.
  • The full credit is nonrefundable and is limited to the amount of tax you must pay on your taxable income.
  • This may be used toward tuition and fees, as well as for books, supplies and equipment required for the course.
  • The full credit is available to individuals, whose modified adjusted gross income is $55,000 or less, or $110,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. You cannot claim the credit if your modified adjusted gross income is $65,000 or more ($130,000 or more if you file a joint return).

Expenses not qualifying for either tax credit:

  • Room and board
  • Transportation
  • Insurance
  • Medical expenses
  • Student fees unless required as a condition of enrollment or attendance
  • Same expenses paid with tax-free educational assistance
  • Same expenses used for any other tax deduction, credit or educational benefit

At the end of the year, the education institution will issue a Form 1098-T, Tuition Statement to the IRS, as well as the student. This will include some or all of education expenditures. We have qualified professionals to assist you with identifying and claiming these tax credits. For more information on tax strategies that may benefit your business contact a Smith Schafer professional today! Click here to start the discussion. We look forward to speaking with you soon.