Tax Credit FAQ

Source: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index http://www.ahrinet.org/Content/FederalTaxCredits_896.aspx

While the 2009-2010 Tax Credit ($1,500) is pretty appetizing, it can be confusing wading through all of the qualification steps. So at Sinclair Air, we thought that we would post some answers to commonly asked questions to help alleviate some stress.

What units qualify?

• Qualified furnaces have an AFUE (or air fuel utilization efficiency) of 95%. AFUE is expressed as a percentage because it shows how much of the energy used to heat the unit is actually expressed as heat and what the exhaust is. So with a 95% furnace, 95% of the energy is expressed as heat for your home. Only 5% is exhaust. The qualified units also have fans that use no more than 2% of the total energy. The SEER for air conditioners (Seasonal energy efficiency ratio) is at 16 or above.
• All of the manufacturers re-examined their units in July, so make sure that your unit qualifies before signing your contract.

Do both my air conditioning unit and furnace need to qualify?

• No. Only one unit may qualify. Or Both units. If it is only one though, your contract needs to be split reflecting the costs of each unit. Because the cost of only the qualifying unit will be applied in the tax credit.

Is the cost of installation included?

• For air conditioning and heating, our portion of the tax credit does include installation costs.

How can I collect the tax credit?

• Tax payers need to fill out IRS form 5695 (http://www.irs.gov/pub/irs-pdf/f5695.pdf). For your records, it is also a great idea to keep a copy of your contract, and the manufacturer's certificate for the equipment (to prove that the units do in fact qualify).

How long is the tax credit applicable?

• The tax credit is available until December 31, 2010. If units are placed into service between January 1, 2009 and December 31, 2010, the tax credit is available.

How does a tax credit work?

• The tax credit is applied not to your income, but to the total at the end. So if you come out owing $100 (FOR EXAMPLE, HYPOTHETICALLY) the tax credit would bring that balance to 0.
• The tax credit is still available to anyone who upgraded energy appliances in 2007.
• The tax credit can be banked. So, for example, say in 2009 you upgrade your windows and in 2010 you upgrade your air conditioning. Both of these upgrades would qualify assuming that you had not met the $1,500 cap.
I hope that this has answered some of your questions. If you have more specific questions about qualifying units or other information, please email me at amandaatsinclairairdotcom, or visit our website: www.sinclairair.com.