Tax Tip: Energy Credit Survives ‘Fiscal Cliff’
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Comstock/Thinkstock(NEW YORK) — One of the credits extended by Congress as part of the so-called “fiscal cliff” deal late last year is the residential energy credit.
“If you’re buying insulation, exterior windows and doors, maybe a new furnace, that was retroactively reinstated for 2012,” says Eric Smith with the IRS.
To claim the credit, simply fill out Form 5695. But if you’re hoping for a big deduction, think again. As Smith explains, the claim is fairly restrictive.
“[The] credit maxes out at $500, and it takes into account similar credits that you may have taken in the past going back to 2006. So if you made major investments you may have already used up your limit,” he says.
The energy credit amount depends on which appliance you buy — not all energy efficient appliances are eligible. To see if yours is, visit energystar.gov.
And if you missed out on the credit in 2012, don’t worry — the “fiscal cliff” deal also extended the residential energy credit for this year.
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