CARL WATTS & ASSOCIATES

March 23, 2015

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Do Going Green Tax
Breaks Still Exist?
You may remember that first there was the Energy Policy Act in 2005 that created a large variety of tax credit programs which applied to solar energy electric systems, PV solar, Solar Water Heating systems and fuel cells. In 2008 The Energy Improvement and Extension Act extended the tax credits to wind solar farms and geothermal heating pumps.

Some of these tax credits expired and then were renewed for yet another year, and another one. By the end of 2013, most of the going green tax incentives withered and died.

But, let us not dwell in the past anymore and rather see what going green tax breaks are still out there for tax year 2014.

The Nonbusiness Energy Property Credit was extended until December 31, 2014 so you may still claim the credit on your 2014 tax return if you didn’t reach the lifetime limit in prior years.

Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.

The other part of the credit is not a percentage of the cost, but is for the actual cost of certain property. This may include items such as water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit. This 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 2014 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.

Your main home must be located in the U.S. to qualify for the credit.

Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging.


You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.

The Residential Energy Efficient Property Credit allows taxpayers to claim a tax credit for properties that generate renewable energy (e.g., solar panels, geothermal heat pumps, small wind energy, fuel cells) that they install on their residence.

You may be able to take a credit of 30% of your costs of qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and fuel cell property. Include any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property and for piping or wiring to interconnect such property to the home.

Unlike some tax incentives, the credit, which will remain intact through Dec. 31, 2016, applies to any owned home, not just a primary residence.

There is no dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
A tax credit for 30 percent of the cost of a residential fuel cell and microturbine system -- up to $500 per 0.5 kilowatt of power capacity — is also available through Dec. 31, 2016. New construction and existing homes qualify for the credit, but the home must be your primary residence.


Energy systems for rental homes are excluded from both credits.


Use Form 5695 to figure and take your residential energy efficient property credit, and the nonbusiness energy property credit.

Also use Form 5695 to take any residential energy efficient property credit carryforward from 2013 or to carry the unused portion of the credit to 2015.


If you made energy saving improvements to more than one home that you used as a residence during 2014, enter the total of those costs on the applicable lines of Form 5695.


Tax credit for hybrid cars has expired, but there is a New Qualified Fuel Cell Motor Credit available for a motor vehicle that is propelled by power derived from one or more cells which convert chemical energy directly into electricity by combining oxygen with hydrogen fuel which is stored on board the vehicle in any form. Under current law, this tax credit expires on December 31, 2014.

The vehicle must be purchased prior to Jan. 1, 2015, and placed in service in the taxable year. For fuel cell vehicles that weigh not more than 8,500 pounds, the base credit amount is $4,000. The amount of credit available for heavy vehicles varies from $10,000 to $40,000, depending on the weight of the vehicle. 

An additional credit may be available for a fuel cell passenger automobile or light truck based on a comparison of the city fuel economy rating of that vehicle with the 2002 model year city fuel economy of a vehicle in its weight class.

You can use Form 8910 to figure your credit for alternative motor vehicles you placed in service during your tax year. The credit attributable to depreciable property (vehicles used for business or investment purposes) is treated as a general business credit. Any credit not attributable to depreciable property is treated as a personal credit.

You can go to the DOE’s Fuel Economy website, to search by make, model and year and see if your car is eligible for a tax credit and to obtain more information about state and local incentives for electric vehicles.

If you like to keep up with the newest electronic devices on the market, you should know there are many useful and eco-friendly alternatives for disposing of your old electronics and take advantage of your charitable donation deduction at the same time.

Many companies have recycling programs for used and unwanted electronics and several have partnered with qualified charitable organizations.

If you're no longer using a device, donate it as soon as you can, as the value of consumer electronics declines at a fast pace and a computer that's three years old, for instance, can be refurbished and used by students; a computer that's six years old will most likely be recycled for parts.

You can assign your own fair market value to each item you donate based on what the item sells for on eBay or somewhere similar – within reason, of course. If the donation is valued at less than $500, there are no forms to fill out. Once your total charitable contribution deductions exceed $500, you must submit Form 8283 with your tax return.

Help from a tax professional is always welcome if you want to be certain you don’t overlook any of the tax deductions and credits you may be entitled to.
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