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Q. We are
installing new vinyl replacement windows, which qualify
for an energy tax credit. Since we have not had any tax
liability for several years and do not expect any when
we file our 2009 federal taxes, would we be entitled to
any credit? A sales rep for a window company said we
would need to complete a form and a check would be
mailed to us. Do you have particulars on the energy tax
credit?
—B.B.,
Green Valley, Ariz.
Unfortunately,
the salesman is incorrect.
That's
too bad, because the government is offering up to
$1,500
in tax credits to people who make certain energy-saving
improvements to their homes — from efficient windows
to insulation, central air conditioning and furnaces.
According
to an
IRS
spokesman, the energy credit is available only to people
who pay taxes, because it lowers the taxes they would
have to pay.
They have
to fill out Form 5695 when they complete their tax
return.
The
credit covers 30 percent of energy-saving improvements,
though there is a cap of
$1,500
on the total amount for 2009 and 2010. So, for example,
if a homeowner does a low-cost project this year and
another in 2010, he could claim
$500
this year and
$1,000
next.
If you
put
$10,000
into windows this year, that would use the entire
$1,500
. After 2010, the credit is no longer available.
For
people who aren't paying taxes this year, they may be
able to participate by delaying the project until 2010
if they think they will be paying taxes then. The credit
must be claimed for the year in which the project is
done. The exception is costly projects such as solar
water heaters, geothermal heat pumps and wind turbines.
Costs then can be carried over into the next tax year.
For
people who might be subject to the alternative minimum
tax, or AMT, timing the project can be important. This
year, the AMT won't interfere with the credit, but 2010
might not work unless the law is changed, said
John Roth
, a senior tax strategist with
CCH Inc.
Roth
considers the tax credit particularly useful for people
who must sell stocks, bonds, mutual funds or other
investments to pay for an energy improvement. Selling
investments can trigger a capital gains tax, which the
energy credit can offset.
If the
tax credit is a key in deciding to make an improvement,
make sure your project is eligible for the American
Recovery and Reinvestment Act of 2009 at www.irs.gov.
Also look for state incentives at the Database of State
Incentives for Renewables & Efficiency at www.dsireusa.org.
Keep all
receipts and paperwork from the project, including the
Manufacturer's Certification Statement. Roth said the
IRS
can be a stickler on making sure the individual actually
pays for the energy-saving item. He suggests writing a
check to the supplier of the energy-saving material,
rather than a contractor. The tax credit does not cover
installation.
Q. I am
looking for a scholarship for my son and have visited
FastWeb.com as you have suggested in the past. Are these
sites secure? They require a lot of information, and I
am a little uneasy about giving out information online.
Or am I just a little paranoid?
—B.T.
You are
not paranoid.
Sites
such as
FastWeb
and Scholarships.com are valuable in searching for
scholarships, but as you can see by the note on
FastWeb
as you register, your name and other information is
shared with commercial interests. That's how the site
makes money.
Fill in
only the essential blanks, never respond to
solicitations and decline the offer to share your name
with outside firms. And nothing precludes you from
shortening personal information or even adopting a name
for the college search. Your child should be searching
for scholarships, but you can ward off solicitations by
having her search as a "parent" rather than
student.
Numerous
books also list scholarships, but they generally are not
as up to date as the Web. Don't forget to contact
college admissions offices, by telephone or online, to
search for in-house scholarships. And consider
organizations in your community — churches, fraternal
organizations, community service organizations, business
organizations, your employer, your labor union and
others.
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