This week I will take a break from my mini-series of tips on miscellaneous deductions to discuss some items of interest that have come up in my reading and in the preparation of clients' 1040s.
The residential energy credit is back! The credit for energy-saving items purchased for your principal personal residence, which originally expired on Dec. 31, 2007, was renewed and expanded for 2009 and 2010. The maximum credit allowed has been raised from $500 to $1,500. The limits that had been placed on specific individual items are eliminated. The new credit is now 30% of the cost of the item — up to the $1,500 maximum.
If you claimed the energy credit in 2006 or 2007 and used up to part or all of the $500 credit maximum that was previously allowed, don't worry. The earlier $500 cap does not apply toward the $1,500 for 2009 and 2010 — you start with a clean slate in 2009.
The $1,500 maximum credit applies to qualified purchases made in 2009 and 2010. If you claim the full $1,500 on your 2009 Form 1040 you cannot claim any additional credit for 2010. But if you claim an $810 credit for 2009, you can still get a credit on up to $2,300 of qualified purchases in 2010.
New Jersey tax pro Robert D. Flach has been preparing 1040s for individuals since 1972.
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