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The 12 Tax Tips of Christmas:
#2 Improve your home

December 14, 2009

We still have a Christmas tax song in our heart. It's on to the second verse of The 12 Tax Tips of Christmas.
2 turtle doves

#2 Improve your home: It's getting cold out there. And if your doors and windows are drafty, it's getting cold in your house, too.

You can plug those household gaps with some help from Uncle Sam.

Back in 2005, a comprehensive energy bill was enacted that contained provisions that offered some tax breaks for folks who made energy efficient improvements to their homes. But for the most part, the benefits were not very much and the rules about what qualified and for how much were convoluted.

In February, the American Recovery and Reinvestment Act took care of that hassle.

Now if you make energy efficient improvements to your residence, you can claim a tax credit worth 30 percent of the cost of all qualifying home improvements, up to a maximum of $1,500.

The credit is available for qualifying energy saving home improvements made in 2009 or 2010.

Note that the $1,500 maximum applies over those two tax years. That means if your home improvements net you a $1,500 credit on your 2009 return, then you cannot claim additional tax credit for more upgrades in 2010.

Upgrades allowed under this provision include adding insulation, energy efficient exterior windows and energy-efficient heating and, if you want to wait a few months, air conditioning systems.

More complex, and expensive, energy operations, such as assorted solar, wind and geothermal systems, also offer a credit of 30 percent. But in these cases, there is no dollar cap. And for your home energy upgrade planning purposes, these improvements are tax credit eligible through 2016.

Uncle Sam's Energy Star Web site has details.

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TAX-SAVVY WAYS 
TO WRAP UP 2026

It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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