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Generate renewed energy credits

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in Small Business Tax,Small Business Tax Deduction Strategies

Do you want to save energy at home and at work? The new American Taxpayer Relief Act of 2012 (ATRA) restores the power to taxpayers.  

Strategy: Cash in on the credits for qualified energy-saving expenditures. Many of these credits have been extended by ATRA through Dec. 31, 2013, retroactive to Jan. 1, 2012.

Therefore, you may be able claim credits for qualified expenses on your individual or business return—or both—for the 2012 tax year.

Energy tax incentives for individuals

Individual taxpayers can claim a credit for installing qualified energy-saving devices in the home. The list of expenses covered by the residential energy credit includes the following:

  • Insulation materials
  • Exterior windows and skylights
  • Exterior doors
  • Central air conditioners
  • Natural gas, propane and oil water heaters or furnaces
  • Hot water boilers
  • Electric heat pump water heaters
  • Certain metal roofs
  • Biomass stoves
  • Advanced main air circulating fans

Currently, the credit is equal to 10% of qualified expenses, up to a lifetime maximum of $500. (Previously, the credit was 30% up to a maximum of $1,500.)

Also, the current credit for windows is capped at $200; furnaces and boilers at $150; air conditioners, air source heat pumps and biomass stoves at $300; and advanced main air circulating fans at $50. Finally, the maximum credit is reduced by residential energy credits claimed in prior years.

Energy tax incentives for businesses

Small business owners may benefit from various energy tax incentives that have been extended by ATRA. This includes (but isn’t limited to) the following credits:

  • Production tax credit for facilities producing energy from wind facilities
  • Credits for alternative fuel vehicle refueling property
  • Credits for cellulosic biofuel production
  • Credits for energy-efficient appliances
  • Production credits for Indian coal facilities
  • Tax credits for ethanol

Tip: Depending on the industry, other energy tax incentives may be available to your business. Consult with your tax pro.

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