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.

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!

3 Key Skills to Look for in an Accountant

1-3 Key Skills to Look for in an Accountant

Your accountant is going to know every little detail about your finances – a topic that is considered taboo in polite society! How on earth do you choose someone who you need to trust with your short and long-term goals, your legacy, your compliance with tax legislation, your business’s financial performance, and more?

Being in this business has taught us that there are three major skills a great accountant has:

1. CPAs Know the Accounting Basics

This seems too obvious to state, but the accountant must know the basic principles of the profession. A great example is the matching principle. This principle states that the related revenues and expenses must be matched in the same period to link the costs of an asset or revenue to its benefits.

Another is the convention of conservatism, or doctrine of prudence. This is a policy of anticipating possible future losses but not future gains. It states that when choosing between two solutions, the accountant should select the one that will be least likely to overstate assets and income.

2. CPAs Know Tax Regulations Backwards and Forwards

There’s no quicker way for a business to fall on hard times than to run afoul of tax regulations. Tax laws differ from state to state and so it is critical that your accountant is entirely familiar with the tax legislation that is in effect where your business is registered and derives most of its income.

Not only will this keep you out of trouble, but it could also be to your company’s benefit as there may be credits and other advantages of which you are unaware. A good accountant will have a thorough knowledge of the best business practices for your field to ensure tax optimization.

Certified public accountants are as well-versed in tax regulations and loopholes for individuals’ needs.

3. CPAs Provide Customer Service

The old stereotype of an accountant has long ceased to exist in real life. Gone are the days of colorless old men entering numbers into huge books with their sharp pencils. The world of accounting has become exciting and has attracted bright and interesting professionals.

Your accountant needs to interface with the Board of your business and understand the work that you do as well as the people that you are. They also need to understand your goals and the legacy you would like to leave. The financial side of your life should be a joy and not a grudge.

Certified Public Accountants

Discover what superior accounting professionals can do for your business. Contact Georgen Scarborough Associates, PC to help you navigate your personal and business finances.

Financial Statements: Evaluating Key Performance Indicators for Business Health

  • 07 Sep 2021
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1-Financial Statements Evaluating Key Performance Indicators for Business Health

Financial statements are records of business activities and a company’s financial performance. Government agencies, accountants, and firms at times audit them to ensure accuracy and for tax, financing, or investing purposes.

What Information Do Financial Statements Show?

Financial statements include:

  • Income statement
  • Cash flow statement
  • Balance Sheet

Because lay people, or potential investors, as well as accounting professionals, analyze your financial statements, it is imperative to design your statements in an easy-to-use and easily understandable manner. Overly complex systems can create misunderstandings that could have vast ramifications.

What are KPIs?

Key Performance Indicators (KPIs) are predetermined data trends. Track these regularly to evaluate the wellbeing of your business. KPIs provide quick, easily accessible, and comprehensible views of how your business is functioning. Not to mention, they help in predicting long-term performance.

KPIs that you keep watch on may be different from those of other businesses; after all, every situation is unique. Having said that, there are five basic data types you can use as KPIs for most businesses. Mold them to suit your purposes:

  1. Revenue: Yes, the obvious must be stated. Track revenue consistently to ensure that your income is steady. Revenue is used as a KPI to track trends such as when revenue dips and why.
  2. Direct Expenses: Track direct expenses in terms of quantity and trends. For example, it could be helpful to have big expenses coincide with times of increased revenue.
  3. Overhead (ongoing business cost): This does not necessarily link to expenses but remains stable most of the time.
  4. Gross Profit Margin is an important indicator of how well you are balancing income and output. Ideally, it should trend upward, but there are factors that upset the trends. This KPI helps you to adjust pricing when necessary.
  5. Net Profit Margin is your profit after all expenses are taken into account. Keeping an eye on this helps you to keep expenses in check.

Have your company’s financial statements taken care of by reliable professionals so that you can focus on running the business. Contact Georgen Scarborough Associates, PC to get your financial statements in order.

How financial statements can be helpful in decision making

2-financial statements make future decisions on the basis of accurate data

Financial accounting and financial statements are a vital part of a company’s operations. Financial statements can be helpful in decision-making on the basis of making good decisions on accurate data. Properly kept and presented financial records allow companies and outside parties to get a complete picture of the organization’s financial health. Financial statements inform decision-making in the following ways. 

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What a QuickBooks advisor can do for you

7-Find out how a QuickBooks Advisor can help you make the most of the program

QuickBooks is an extremely useful tool, and makes it easier than ever for businesses to stay on top of their finances. However, not all businesses use this tool effectively. A QuickBooks advisor is often necessary to help you make the most of this powerful software.

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The IRS’ New 100% Depreciation Deduction and What Write-Offs You Can Look Forward To

  • 21 Oct 2019
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100% depreciation deduction

In September of 2019, the Treasury Department and the Internal Revenue Service released final regulations and additional proposed regulations under section 168(k) of the Internal Revenue Code on the new 100% additional first year depreciation deduction. This 100% depreciation deduction is great news for businesses both big and small as it makes it possible for them to write off most depreciable business assets in the year they are placed in service by the business.

Below, we take a look at the depreciation deduction in more detail, along with a brief summary of the types of business assets that business owners will be able to write-off going forward. 

Which Assets Are Included?

According to the final regulations, depreciable business assets that can be written off in the year they are placed in service by the businesses include machinery, equipment, computers, appliances, and furniture, to name a few. However, these assets only qualify as write-offs if they were placed in service after September 27, 2017.

What Are the Additional Proposed Regulations That Have Been Submitted?

The additional proposed regulations include rules regarding:

  • Certain property not eligible for the additional first year depreciation deduction
  • A de minimis use rule for determining whether a taxpayer previously used property
  • Components acquired after September 27, 2017, of larger property for which construction began before September 28, 2017
  • Other aspects not dealt with in the previous August 2018 proposed regulations

I Want to Elect out But Have Already Filed my 2018 Tax Return – What Now?

Do not worry. Taxpayers who have filed their 2018 return already but who still wish to elect out of the 100% depreciation deduction will be granted a leeway of six months from the original deadline, without an extension, to file an amended return. You may wish to elect out if you would like to avoid the expiration of income tax credits or net operating losses.

Looking for professional assistance in terms of the new 100% depreciation deduction? Contact the financial service experts at Georgen Scarborough Associates today!