If achieving energy efficiency in your home and saving money are important, take advantage of federal and state tax credits before they expire. In addition to saving energy with a new, efficient water heater, you’ll be able to put the saved tax dollars toward this important home investment.
Water heaters can account for 14 percent to 25 percent of the total energy consumed in the average home, according to Energy Star. A quick method to see if your water heater is operating efficiently is to place your hand on it. If it’s warm to the touch, your system is losing energy. To grasp the amount of energy you can save with energy-efficient water heaters, consider that standby heat transference on inefficient water heaters can be cut by as much as 45 percent – significantly reducing your total water-heating costs.
If these percentages come as a surprise, contact a heating and cooling professional to have your water heater evaluated. If you decide to upgrade, tax credits can significantly reduce your upfront costs. You can claim a credit of as much as $300 on your 2011 federal taxes for a gas, oil or propane water heater or an electric heat pump water heater. But the federal tax credit expires Dec. 31.
In addition, you can apply for a Michigan state tax credit of up to 10 percent of your installed costs, up to a limit, for an efficient water heater.
Follow these steps for claiming your federal and state tax credits:
- Work with a heating and cooling professional to make sure you select a heater that meets the government's efficiency requirements.
- Make copies of your receipts.
- Save the Manufacturer Certification Statement for your records.
- For federal tax credit, fill out IRS Form 5695. For Michigan state tax credit, fill out Form 4764.
- Water heater tax credits can only be claimed once and may only be filed for the year purchased.
- Water heater purchase must be before Jan. 1, 2012.
- Submit tax form 5695 or 4764 with your federal or state tax filings.
For more information, contact Mast Heating & Cooling.
Our goal at Mast Heating & Cooling is to help educate our customers about energy and home comfort issues (specific to HVAC systems). For more information about tax credits and other HVAC topics, download our free Home Comfort Resource guide.
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