Things You Can Do at Home to Get Home Energy Tax Credits

Energy tax credits offer an excellent opportunity for DIY individuals and homeowners to save money while reducing their environmental footprint. These incentives, provided by governments, aim to promote energy-efficient improvements in homes and properties. The good news is that you can often tackle many of these projects yourself to maximize your savings. Here are some common examples of energy-efficient upgrades that may qualify for tax credits:

Credit: Kindel Media/Pexels

Solar Panels:

Installing solar panels on your property to generate electricity from sunlight is a common and widely recognized way to qualify for energy tax credits. This can include both solar photovoltaic (PV) systems for electricity generation and solar thermal systems for water heating.

Energy-Efficient Windows and Doors:

Upgrading to energy-efficient windows and doors that meet specific energy performance criteria, such as ENERGY STAR certification, may qualify for tax credits. These improvements help reduce heat loss and gain in your home, leading to lower energy consumption.

Insulation:

Adding insulation to your home to improve its energy efficiency can often be eligible for tax credits, and is one of the more cost-efficient ways of improving your home’s heating and cooling capabilities, all while getting tax credits. Properly insulated homes are better at maintaining consistent indoor temperatures and reducing the need for heating and cooling.

Credit: Airam Dato-on/Pexels

High-Efficiency HVAC Systems:

Replacing or upgrading your heating, ventilation, and air conditioning (HVAC) system with high-efficiency models that meet specific energy efficiency standards may qualify for tax credits. This includes furnaces, air conditioners, heat pumps, and boilers.

Small Wind Turbines:

In some regions, installing small wind turbines on your property to generate electricity can be eligible for tax credits. These turbines harness wind energy and convert it into usable electricity. They can also be found at certain retailers or online.

Credit: ENERGY STAR


Energy-Efficient Appliances:

Purchasing energy-efficient appliances that meet specific criteria may qualify for tax credits. These appliances often have the ENERGY STAR label and consume less energy than standard models.

Energy Audits:

In some cases, the cost of an energy audit to assess your home’s energy efficiency and recommend improvements may also be eligible for tax credits.

The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation:

2022: 30%, up to a lifetime maximum of $500

2023 through 2032: 30%, up to a maximum of $1,200 (heat pumps, biomass stoves and boilers have a separate annual credit limit of $2,000), no lifetime limit.

Conclusion:

Take advantage of these energy tax credits by tackling these DIY projects. Remember that eligibility criteria, maximum credit amounts, and application processes can vary by location and specific tax credit programs. Consult with Georgen Scarborough Associates and keep meticulous records of your energy-efficient improvements and expenses. Stay informed about any changes in tax laws and incentives to ensure you make the most of these opportunities.

For more information on how to outfit your home to receive 2023 – 2032’s Home Energy Tax Credits, contact Georgen Scarborough Associates at (703) 319-3990 or through their website at gsacpa.com.

Source: Energy.gov, IRS.gov

Visit the Energy.gov site for more information:
Making Our Homes More Efficient: Clean Energy Tax Credits for Consumers | Department of Energy

Visit the IRS.gov site for more information:
Home Energy Tax Credits | Internal Revenue Service (irs.gov)

Energy Efficient Home Improvement Credit | Internal Revenue Service (irs.gov)

Frequently asked questions about energy efficient home improvements and residential clean energy property credits — Qualifying Residence | Internal Revenue Service (irs.gov)

 

 

How to Receive Your Home Energy Tax Credits

Each tax credit program has its own eligibility criteria, so it’s crucial to review these requirements carefully. Common eligibility factors include:

  • Type of property (primary residence or second home)
  • Installation dates (some credits may require installations to be completed by a specific deadline)
  • Manufacturer certifications and product specifications
  • Maximum credit amounts

Ensure that you meet all the specific criteria for the tax credits you intend to claim.

Keep Detailed Documentation:

Accurate documentation is essential when applying for home energy tax credits. Keep thorough records of all relevant documents, such as:

  • Invoices and receipts for product purchases and installation costs
  • Manufacturer certifications and product specifications
  • Proof of ENERGY STAR ratings or other energy efficiency qualifications
  • Photos or documentation of the completed upgrades

Having these records on hand will simplify the tax credit application process.

File the Appropriate Tax Forms:

 

Credit: IRS.gov/Phillip Clark

To claim home energy tax credits, you will need to file the necessary tax forms. Typically, you will use IRS Form 5695, Residential Energy Credits, to report your eligible expenses. Be sure to follow the instructions provided with the form and include all required documentation.

Consult with Georgen Scarborough Associates:

Navigating the tax code can be complex, especially when claiming energy-related tax credits. Consulting with Georgen Scarborough Associates who specializes in helping homeowners maximize their tax credits, can help ensure that you follow all the rules and regulations and maximize your tax savings.

Submit Your Tax Return:

Include your completed IRS Form 5695 and all supporting documents when you file your annual tax return. It’s essential to submit your tax return accurately and on time to receive the energy tax credits you’re eligible for.

Conclusion:

Receiving home energy tax credits is a rewarding way to offset the costs of energy-efficient home improvements while contributing to a more sustainable future. By identifying eligible upgrades, researching available tax credits, meeting eligibility requirements, maintaining detailed documentation, and seeking professional guidance when needed, you can successfully navigate the process and enjoy the financial benefits of a greener, more energy-efficient home.

For more information on how to receive credit for your home improvements for 2023 – 2032’s Home Energy Tax Credits, contact Georgen Scarborough Associates at (703) 319-3990 or through their website at gsacpa.com.

Source: Energy.gov, IRS.gov

Visit the Energy.gov site for more information:
Making Our Homes More Efficient: Clean Energy Tax Credits for Consumers | Department of Energy

Visit the IRS.gov site for more information:
Home Energy Tax Credits | Internal Revenue Service (irs.gov)

Energy Efficient Home Improvement Credit | Internal Revenue Service (irs.gov)

Frequently asked questions about energy efficient home improvements and residential clean energy property credits — Qualifying Residence | Internal Revenue Service (irs.gov)

Home Improvements that Qualify for Home Energy Tax Credits

Homeownership comes with various responsibilities, including maintaining and improving your property. However, what many homeowners may not realize is that making energy-efficient upgrades to their homes can not only reduce utility bills but also qualify them for valuable tax credits. These incentives serve as an excellent way to offset the initial costs of making eco-friendly improvements, as well as increase the value of your home. In this article, we explore home improvements that can help you secure home energy tax credits.

Solar Panel Installation

Installing solar panels is one of the most effective ways to reduce your carbon footprint while taking advantage of significant energy tax credits. Solar power systems convert sunlight into electricity, which can be used to power your home. The federal government, along with many state governments, offers attractive incentives to homeowners who invest in solar energy. The most notable of these incentives is the Federal Solar Investment Tax Credit (ITC).

The Federal Solar ITC allows homeowners to claim a tax credit of up to 30% of the total cost of their solar panel installation. To qualify for this credit, your solar panels must be installed on a primary or secondary residence, and the installation can be completed within the eligibility window of 2023 to 2032. The percentage of the credit remains fixed through that period of time.

In addition to federal incentives, some states offer additional tax credits, rebates, or performance-based incentives for solar panel installations. Be sure to research the incentives available in your area to maximize your savings.

Credit: Erik Mclean/Unsplash

Energy-Efficient Home Insulation

A well-insulated home is crucial for maintaining comfortable indoor temperatures and reducing energy consumption. Upgrading your home’s insulation can make a substantial difference in your energy bills and may also qualify you for energy tax credits. The Residential Energy Efficiency Property Credit allows homeowners to claim a tax credit for eligible energy-efficient home improvements, including insulation.

To qualify for this credit, you must install qualified insulation materials that meet the minimum criteria set by the U.S. Department of Energy. The credit covers 30% of the cost of the materials, up to a maximum of $500.

Energy-Efficient HVAC Systems

Heating and cooling your home accounts for a significant portion of your energy consumption. Upgrading to energy-efficient HVAC (Heating, Ventilation, and Air Conditioning) systems can help you reduce energy usage and may make you eligible for tax credits. The Residential Energy Efficiency Property Credit mentioned earlier also applies to energy-efficient HVAC systems.

To qualify for the credit, you must install HVAC systems that meet specific energy efficiency requirements outlined by the IRS. The credit covers 10% of the cost of eligible HVAC equipment, such as high-efficiency furnaces, air conditioners, and heat pumps, up to a maximum of $500. Installing a programmable thermostat to complement your energy-efficient HVAC system can further enhance your home’s energy efficiency and may also be eligible for tax credits.

Energy-Efficient Doors

Credit: Family Handyman

To be eligible for tax credits, the doors you install should meet specific energy efficiency standards. Typically, energy-efficient doors have better insulation properties and reduce heat transfer between the interior and exterior of your home. Look for doors with the ENERGY STAR label or those that meet the necessary U-factor and Solar Heat Gain Coefficient (SHGC) ratings to qualify. The credit covers 30% of the cost of eligible exterior doors, up to a maximum of $500, or up to $250 each.

Conclusion:

Investing in energy-efficient home improvements not only reduces your environmental impact but also offers the added benefit of potential tax credits. Solar panel installations, energy-efficient insulation, and HVAC systems are just a few examples of projects that can make your home more eco-friendly while putting money back in your pocket through tax incentives.

Before embarking on any energy-efficient home improvement project, it’s essential to research the available tax credits, eligibility criteria, and deadlines. Consult with Georgen Scarborough Associates ensure you meet all requirements and maximize your savings. By taking advantage of these incentives, you can make your home more energy-efficient, comfortable, and cost-effective in the long run.

For more information on home improvements that qualify for Home Energy Tax Credits, contact Georgen Scarborough Associates at (703) 319-3990 or through their website at gsacpa.com.

Source: Energy.gov, IRS.gov

Visit Energy.gov site for more information:
Making Our Homes More Efficient: Clean Energy Tax Credits for Consumers | Department of Energy

Visit IRS.gov site for more information:
Home Energy Tax Credits | Internal Revenue Service (irs.gov)

Energy Efficient Home Improvement Credit | Internal Revenue Service (irs.gov)

Frequently asked questions about energy efficient home improvements and residential clean energy property credits — Qualifying Residence | Internal Revenue Service (irs.gov)

 

 

2022 Tax Savings Laws

Being aware of tax savings laws passed in 2022 can help you plan for the future and make good financial decisions. Congress passed two laws in 2022 to help create incentives for Americans who are interested in purchasing clean vehicles and making decisions on planning for retirement: The Inflation Reduction Act of 2022 and the SECURE 2.0 Act, respectively. Learn more about your eligibility for tax credits and how you can increase retirement savings here.

The SECURE 2.0 Act

The SECURE 2.0 Act makes notable changes to qualified retirement plans. Here are the key takeaways about the new law from fidelity.com:

  • The age to start taking RMDs increases to age 73 in 2023 and to 75 in 2033.
  • The penalty for failing to take an RMD will decrease to 25% of the RMD amount, from 50% currently, and 10% if corrected in a timely manner for IRAs.
  • Starting in 2024, RMDs will no longer be required from Roth accounts in employer retirement plans.
  • Catch-up contributions will increase in 2025 for 401(k), 403(b), governmental plans, and IRA account holders.
  • Defined contribution retirement plans will be able to add an emergency savings account associated with a Roth account.

Managing your finances responsibly helps you maintain a good state of mind. It is a good idea to consult your financial advisor or tax professional to get the best advice on how to make the most of your financial situation by learning how the most recent changes in tax law can be beneficial for you. To read more about the specifics of the SECURE 2.0 law, visit: https://www.fidelity.com/learning-center/personal-finance/secure-act-2

Tax Credits and Incentives for Energy Efficiency

The Inflation Reduction Act of 2022 offers new federal income tax credits applied retroactively through 12/31/2022. And updates will be applied for 2023 and remain effective through 12/31/2032. Its savings for homeowners can provide up to $3,200 annually to lower the cost of energy-efficient home upgrades by up to 30 percent. It also details savings for home builders and commercial building owners. To see what kinds of green improvements to your home are eligible for tax credits, visit this link: https://www.energystar.gov/about/federal_tax_credits/federal_tax_credit_archives/2022_tax_credit_information

Credits for New Clean Vehicles

You may qualify for a credit of up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV) in 2023 or after. However, there are a number of qualifications that must be met to be eligible. This is in regard to who qualifies and what the criteria of a qualified vehicle are. Visit this link https://www.irs.gov/credits-deductions/credits-for-new-clean-vehicles-purchased-in-2023-or-after to learn more.

To see the list of Qualified Manufacturers of the vehicles currently eligible for a credit, visit this link: https://www.irs.gov/credits-deductions/manufacturers-and-models-for-new-qualified-clean-vehicles-purchased-in-2023-or-after

Georgen Scarborough Associates is committed to staying informed of the most current tax laws to offer its clients the best advice so that they can maximize their tax returns. Please feel free to share this page with anyone you know who can benefit from learning this information.

The Inflation Reduction Act

Inflation Reduction Act Tax News

This information on The Inflation Reduction Act is shared from The Journal of Accountancy article, A deeper dive into the Inflation Reduction Act’s tax provisions

The budget reconciliation bill, P.L. 117-169, known as the Inflation Reduction Act, was signed into law on Aug. 16. It includes numerous tax provisions, including new corporate taxes. It also contains numerous clean-energy-related tax incentives and money for IRS enforcement and other initiatives.

Corporate Alternative Minimum Tax

The new corporate AMT is based on book income rather than taxable income. Specifically, it imposes a 15% tax on the excess of the corporation’s adjusted financial statement income over its corporate AMT foreign tax credit for the year.

Excise Tax on the Repurchase of Corporate Stock

The act introduces a new 1% excise tax on corporate stock repurchases (new Sec. 4501). Covered corporations must pay the tax on the fair market value (FMV) of any stock the corporation repurchases during the tax year.

Clean Energy Provisions for Individuals

The Sec. 25C nonbusiness energy property credit is extended through 2032 and is renamed the energy-efficient home improvement credit. The amount of the 25C credit is changed from a $500 maximum lifetime credit to a credit of up to $1,200 per year.

Clean Vehicle Credits

The act also removes the limitation on the number of vehicles eligible for the credit, so electric vehicles purchased from manufacturers that had formerly reached their cap will now be eligible for the $7,500 credit. It also imposes a new requirement that a percentage of critical minerals used in the car must have been extracted or processed in the United States or in a country with which the United States has a free trade agreement or recycled in North America.

Clean Energy Manufacturing

The act extends the Sec. 48C advanced energy project credit by making allocations for up to $10 billion more in awards for qualified investments, effective Jan. 1, 2023. To encourage the clean production of electricity, the act creates a new credit for the production of electricity at qualified facilities placed in service after Dec. 31, 2024, with a greenhouse gas emissions rate of zero.

Energy Provisions for Businesses

The Sec. 45 credit for electricity produced from certain renewable sources (including geothermal, solar, and wind facilities) is extended through 2024. Sec. 48 is also amended to provide an increase in the energy credit for qualified solar and wind facilities placed in service in connection with low-income communities. The act creates a zero-emission nuclear power production credit and introduces an alternative deduction under Sec. 179D for taxpayers that retrofit property to be more energy efficient.

Treating clean energy tax credits as payments

Under new Sec. 6417, eligible taxpayers can elect to treat a multitude of eligible energy credits as tax payments. These range from alternative fuel refueling property credits to clean electricity investment credits. Under new Sec. 6418, eligible taxpayers generally can transfer these credits (except the qualified commercial vehicle credit) in any tax year to another taxpayer.

To make sure you maximize your refund, consider having your taxes done by a professional tax expert who will know all the relevant tax laws for your situation.

Georgen Scarborough Associates provides tax preparation services. If you need help or advice filing your tax return and reaping the benefits of the latest tax laws, please contact one of our tax preparation experts today.

Why We Recommend QuickBooks for Small Business Owners

Why small business owners should use QuickBooks

Not using QuickBooks? You should be! QuickBooks is essential for small business owners. Here’s why we recommend that all small business owners use QuickBooks today.

It Helps With Sales Management

Cannot afford to hire a huge sales team? QuickBooks helps small businesses to efficiently monitor their sales. Whether you are starting or growing your company, you need to keep track of customer sales to track your income and expenses. With QuickBooks, you can see who owes you (your accounts receivable) and review sales reports that will help your business to keep track of your invoices without having to hire a big sales team. 

QuickBooks Tracks Business Expenses

Are your expenses exceeding your income? As a small business owner, you need to carefully keep track of your expenses to ensure you don’t land in debt. QuickBooks automatically does this by keeping track of your bills and expenses. You can also record transactions that you make to QuickBooks. It will not only help you to eliminate unnecessary expenses but it can also pay your bills in time for you.

You Can Gain Insights Into Your Business Performance

When you use QuickBooks to manage your income and expense, you get access to valuable financial reports. These reports are automatically updated as your business progresses. The info can help you to gain potential investors or even a line of credit for your small business which will help it to grow.

How To Begin Your QuickBooks Journey

Now that you know some of the benefits you can receive from QuickBooks, it’s time to get started. If you have staff on hand who already know how to navigate through QuickBooks, great. If you don’t, you may want to consider hiring a QuickBooks advisor such as the professionals from Georgen Scarborough who can train your staff and provide you with tips to take your small business to the next level.

For help with using QuickBooks, be sure to contact our team today!

How Adding a 401(k) Can Improve Your Business

How adding a 401(k) can improve your business

A 401(k) plan has a lot of benefits for businesses. It is important to employees but it can also help you to retain and attract new talent. We discuss why adding a 401(k) plan is the right move for your business.

Benefits of Adding a 401(k) Retirement Plan To Your Business

Retirement benefits can help to improve your business outlook. Here are some ways it achieves this goal:

  • It helps your business to recruit the best talent

It can be tough to find the right candidates for your business. When candidates and potential staff are considering your business, they don’t just look at the salary on offer, but they also consider retirement benefits to be important to them. Adding a 401(k) plan can help your business hire and retain the best staff to help your company grow.

  • Lower tax for employees and employers

When business owners and employees contribute their salary to a 401(k) plan, their income is reduced, which puts them in a lower tax bracket. The result is they both pay a lower tax liability at the end of the financial year. 

  • Lower tax deductions for businesses

A 401(k) plan contribution by an employer may qualify as a business expense, which automatically makes them tax-deductible. Small businesses can especially benefit from 401(k) accounts as any matching or profit-sharing contributions are tax-deductible, giving them a much-needed saving on business tax.

How to add a 401(k) plan to improve your business?

Business tax can be a significantly large portion of a business’s expense. Small businesses and start-ups can benefit the most from taking advantage of a 401(k) plan for tax deductions. Larger benefits can increase productivity and employee loyalty to their business by providing them with retirement benefits. 

To add a 401(k) plan, you need to hire a financial accountant or bookkeeper who will help you with payroll services and retirement benefits. An accountant can help you with tax preparation and deductions that come from the 401(k) plan.

If you’re looking for a professional accountant to assist you with your 401(k) plan tax deductions, give us a call today!

5 Ways Your Non-Profit Can Save Money

Tax preparation for non-profit businesses

Is your non-profit organization experiencing cash-flow problems? Tax preparation is one way you can save money. Find out other ways to save money here.

  • Reuse and recycle material

Some non-profits require materials daily. These include t-shirts and posters for fundraising events. Although necessary, creating new material all the time can add up to costs in the long run. Save money by reusing and recycling material where possible. Ask staff to reuse dry clean t-shirts, table cloths, and covers and reuse posters where possible to save cash.

  • Recruit volunteers

Volunteers are a great option when you’re short-staffed. A lot of people want to help out non-profits that mean something to them and will be happy to do so without a paycheck. Make sure you provide them with reasons to join your non-profit, such as showing them how they will be helping others. You can also offer unpaid internships to younger members and provide them with a letter of completion at the end of the year to help them enter the workforce.

  • Try to go paperless

The cost of ink, paper, and even pens can start to add up. Apart from saving the environment, going paperless will reduce a lot of costs. Try investing in digital solutions and filing systems such as QuickBooks which make sorting documents easier and will save you money in the long term. Quickbooks is easy to learn but if you need a QuickBooks advisor, Georgen Scarborough can help out.

Did you know you can save money by hiring a professional such as an accountant to handle your taxes? It may seem tempting to do it yourself but an accountant can find you tax breaks you didn’t even know you had with a non-profit organization. Apart from that, they can also help you to reduce unnecessary expenses and provide you with tax advice.

Georgen Scarborough has professional tax accountants who can help you with your taxes, accounting, and finance. 

Give us a call today for tax preparation for your non-profit organization!

How to Avoid a Tax Audit

1-Nobody wants to be audited

Nobody wants to be audited. Thankfully there are ways to avoid a tax audit. Read on for ways to keep your business in the good books with the IRS. 

Avoid Accounting Errors 

A simple accounting error can turn into an audit if you aren’t careful. Make sure your calculations are correct. Avoid mathematical errors by hiring a professional accountant to help you out and double-check your numbers. 

Always Sign your Tax Returns 

A lot of people surprisingly forget to sign their tax returns. A failure to sign your returns will raise flags for the IRS. They might wonder why you did not sign and what you are hiding from them.

Don’t Underreport your Income 

Leaving out a sale from an asset or side income might be tempting but it can get you in trouble. If you get caught not reporting income, you can be forced to pay back taxes for it, which includes interest on your income tax. You can’t just get caught through your audit but you risk getting caught if someone who paid you for a product or service is audited and they link the cash back to you.

Don’t Underestimate your Deductions

Another temptation would be to deduct tax from a home office. Although some items are reasonable, don’t overestimate your expenses. Deducting a high amount for your rent for example should signal a red flag. Only deduct what you use for your business.

Don’t Fail to Hire a Professional 

It is best to hire a professional to assist you with your financial statements and audits to ensure that you are calculating your tax correctly. 

Avoid a tax audit by hiring the professionals at Georgen Scarborough – give us a call today!

How Summer Jobs Help Teens

Hiring a teen for a summer job can help them to gain valuable skills. Here’s how summer jobs help teens, as well as how we can help you with tax preparation for teens. 

Why include teens in job programs and internships?

1.  It teaches teens responsibility 

Some teens do not yet realize the hard work needed to become successful. Helping them to enter the workplace and introducing them to corporate life will teach them how to earn their money and the responsibilities that come with having a job. They will learn how to accept feedback and the value of teamwork, among other responsibilities.

2.  A summer job teaches valuable skills

Teens can learn valuable skills such as good ethics and time management through summer jobs. These lessons are important as they enter adulthood and learn to be responsible working adults. 

3. Build teens’ self-esteem 

Teens are growing up in a digital age where they tend to compare themselves to others on social media. Their self-esteem can take a dive but with a job, they can grow their confidence and feel better about their achievements in life. 

4. Jobs provide independence 

A summer job is a good way for teens to gain independence from their parents. Earning their own money will help them to save up for college or eventually start their own business. They will also learn to be tax-abiding citizens. 

How can we help you with tax preparation for summer jobs?

If you are hiring teens even for summer jobs, or your teen is looking for a summer job, you will need to check the tax implications. At Georgen Scarborough, we help families and businesses with their tax preparation, payroll services, and financial audits. We can help you to sort out your tax documents and help your business with payroll for teens. 

For more information on our tax preparation and accounting services, call us today!