Tuesday, July 13, 2010


As I was driving down to Neptune to do my laundry this morning a deceptive commercial for storm windows played on the radio.

The ad basically said if you run into the sponsor’s store and buy storm windows before the end of the year the government will give you $1,500.

As Ira Gershwin wrote, It Ain't Necessarily So!

Yes, you can claim an energy tax credit of $1,500 for qualified purchases on your 2010 Form 1040. And yes, this includes storm windows.

However the credit is actually 30% of the total of your qualified purchases, up to a maximum of $1,500. So if you run down and buy $1,000 worth of storm windows the most you will get from Uncle Sam is $300. You must spend $5,000 in order to get the full $1,500.

And not all storm windows qualify. The windows must meet certain U factor and SHGC requirements (don't ask me what this means). The manufacturer will know if “his” windows qualify and will be able to provide purchasers with a Manufacturer’s Certification if they do.

Be aware that installation costs for windows, as well as doors, insulation, and roof, are not eligible for the credit.

The $1,500 maximum applies to the two year period of the credit – tax years 2009 and 2010. So if you purchased a qualifying item in 2009 and have already claimed the full $1,500 you will get absolutely no tax credit for qualifying storm windows purchased in 2010. If you claimed a $1,000 energy credit on your 2009 Form 1040 the most you can get for 2010 is $500.

And you must have a net tax liability of at least $1,500 to get a tax benefit of $1,500 for qualifying energy credits. The credit is neither refundable (thank God) nor able to be carried forward.

Before you run down anywhere to buy anything that you think will provide you with an energy credit check your 2009 Form 1040 to see what, if anything, has already been claimed. Then I suggest you go to the “Federal Tax Credits for Consumer Energy Efficiency” page at www.energystar.gov.

This is a great resource. It provides the very specific requirements for eligibility of each individual item – i.e. Heating, Ventilating, Air Conditioning (HVAC), Insulation, Roofs (Metal and Asphalt), Water Heaters, Windows and Doors, etc. – as well as links to lists of specific manufacturers and products that qualify. Prior to making the a purchase, check out the specific requirements at the Energy Star web page and make sure what you are buying does qualify.

And if you do buy be sure to get the Manufacturer’s Certification.

This misleading ad is similar to one that tells you to donate your car to a specific charity and get a big tax deduction. Again – it ain’t necessarily so. For one thing, in order to claim a deduction for donating your car to charity you must be able to itemize. And, again, you must have an actual tax liability that can be reduced by an additional itemized deduction.

I have said and written many times, here and elsewhere, that the best tax advice I can give you is - DON’T ACCEPT TAX ADVICE FROM ANYONE OTHER THAN A PROFESSIONAL TAX PREPARER. Don’t listen to a broker, a banker, an insurance salesman, or your Uncle Charlie! Or a radio ad!


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