JK Harris and Company, Creating Lifetime Clients

Bill Wandel, Enrolled Agent and Licensed Taxpayer Representative

There’s no time to waste. You have just until the end of this year to take advantage of the tax credits available thanks to the Energy Policy Act of 2005.

What tax credits are those you ask? Well, believe it or not, you can earn credits on your tax return by making your home more energy efficient. But that’s not all. You can also earn credits by purchasing and driving a more energy efficient vehicle, but we’ll talk about that in a minute.

First, I want to go over the home improvements that can earn you credit. If you add ceiling fans, window treatments such as storm windows and shutters, insulation, exterior doors, metal roofs and/or gas powered dryers, water heaters and stoves, you can qualify for the residential energy credit. Keep in mind, the window treatments and exterior doors cannot be just for show, to make your home look better. They actually have to be capable of being used to save energy.

Just remember that the purchase of these products must be between Dec. 31, 2005 and Jan. 1, 2008 in order to qualify for the tax credit. Also keep in mind that these are tax credits and not tax deductions. Unlike tax deductions, tax credits are subtracted from the final amount of tax you owe. For instance, if you qualify for a tax credit of $1,000 and owe $7,000 in taxes, you pay $6,000.

Now, moving on to the vehicles. There are currently four categories of vehicles eligible for the Alternative Fuel Motor Vehicle Credit: fuel cell vehicles, advanced lean burn technology vehicles, hybrid vehicles, and alternative fuel vehicles.

Hybrid vehicles seem to be the most popular right now. Basically, they run on both an internal combustion engine and a rechargeable battery. Companies making the hybrid vehicles include Honda, Ford, Mercury, Toyota, Mazda, Nissan, General Motors, Saturn, and Lexus.

There is only one vehicle that qualifies under the alternative fuel vehicle category. That is the 2007 Honda Civic GX, which operates solely on compressed gas. In fact the U.S. Environmental Protection Agency calls the GX “the cleanest internal-combustion vehicle on earth.” Not a bad compliment I would say.

So, if you are looking for a new car, it just might be worth your while to check into some of these energy efficient vehicles.

For more information on the energy credits available, visit www.irs.gov.

About Bill Wandel:

Bill has over 30 years of combined experience in private and public accounting. He has been associated with JK Harris since 2001, serving the company as a Licensed Taxpayer Representative. He holds a Bachelor Degree in Economics with a minor in Accounting. Bill has been an Enrolled Agent since January 1990, and became a Certified Public Accountant in 1999.