Individuals can take advantage of new energy tax credits provided by The American Recovery and Reinvestment Act to help pay for home improvements, alternative energy equipment and the purchase of plug-in electric vehicles.

The Residential Energy Property Credit increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. This energy tax credit raises the credit rate to 30 percent of the cost of all qualifying improvements.  The new law also raises the maximum credit limit to $1,500 for improvements completed in 2009 and 2010.

Homeowners can apply this credit to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.

The Residential Energy Efficient Property Credit is a nonrefundable energy tax credit that can be used to help offset the cost for qualified alternative energy equipment for the home.  Equipment such as solar hot water heaters, geothermal heat pumps and wind turbines qualify for this energy tax credit. The new law allows for a credit equal to 30 percent of the cost of qualified property.

Taxpayers can get a Plug-In Electric Vehicle Credit for purchases of two types of plug-in vehicles:  certain low-speed electric vehicles and two- or three-wheeled vehicles. The amount of the credit is 10 percent of the cost of the vehicle, up to a maximum credit of $2,500 for purchases made after Feb. 17, 2009, and before Jan. 1, 2012. To qualify, a vehicle must be either a low speed vehicle propelled by an electric motor that draws electricity from a battery with a capacity of 4 kilowatt hours or more or be a two- or three-wheeled vehicle propelled by an electric motor that draws electricity from a battery with the capacity of 2.5 kilowatt hours.

Taxpayers can get a Conversion Kit tax credit for purchases of plug-in electric drive conversion kits.  The credit is equal to 10 percent of the cost of converting a vehicle to a qualified plug-in electric drive motor vehicle and placed in service after Feb. 17, 2009. The maximum amount of the credit is $4,000. The credit does not apply to conversions made after Dec. 31, 2011. A taxpayer may claim this credit even if the taxpayer claimed a hybrid vehicle credit for the same vehicle in an earlier year.

Starting in 2009, the Alternative Motor Vehicle Credit, including the tax credit for purchasing hybrid vehicles, can to be applied against the Alternative Minimum Tax. Prior to the new law, the Alternative Motor Vehicle Credit could not be used to offset the AMT.

These energy tax credits are more valuable than tax deductions of the same amount, because deductions are applied before the tax rate, while credits are applied after. For instance, with a 35% tax rate, a deduction of $100 would save only $35 of taxes, while a $100 credit would save $100 worth of taxes.

source: irs.gov

In these troubling times we need all the help we can get.  But did you know the IRS may be able to help you during these economically challenging times?  Here are 10 things to know”. 

1. Recovery Rebate Credit: If you didn’t get an economic stimulus payment this past summer and didn’t file a tax return, you may be eligible for the Recovery Rebate Credit . See IRS.gov for details.

2. The Alternative Minimum Tax has been ‘PATCHED”. For 2008, the exemption amounts are $69,950 for married couples filing jointly and $46,200 for single individuals . More information is available at IRS.gov.

3. Cancellation of Debt income: If you have had or will have a home foreclosure, check out the tax rules at IRS.gov. Things may not be as bad as you think.

4. Commuting: If you ride your bike (bicycle) to work in 2009, it could be worth $20 a month, tax free from your employer. See IRS.gov. for more.

5. Deductions: The new additional standard deduction for non-itemizers can be as much as $500 or $1,000 if you are married, filing a joint return. Go to IRS.gov for details.

6. Election to Deduct Sate and Local General Sales Tax: You have an option when itemizing. Claim either State and local general sales taxes paid or state and local income taxes paid, but not both. IRS.gov has more.

7. Mileage: The standard mileage rate is changing from 59.5 to 55 cents per business mile as of Jan. 1, 2009. More information at IRS.gov.

8. Homebuyer Credit: The new “First Time Home Buyers Credit” is for a home purchased after April 8th, 2008 and before July 1st, 2009 and could be worth as much as $7,500. Do you qualify? See IRS.gov.

9. Residential Energy Property Credit: This credit has been re-instated for 2009 and is worth up $500 for up-grading your home with certain energy efficient items. See if you qualify at IRS.gov

10. Plug-in Electric Drive Motor Vehicle Credit: Buy a new plug-in electric car and get a credit of $2,500 or more. See IRS.gov about this today.
And one more for “tax credit”:

11. Record Keeping: Make sure you don’t omit or forget an item so you pay only the correct amount of tax – no more, no less. See IRS.gov for more details

source= az family