As an observant window shopper you may have heard about the 2016 window tax credit. There have long been tax credits associated with energy efficient replacement windows and the federal government has just extended the tax credit for new replacement windows and energy efficient doors.
Which windows qualify?
Over the years there have been different methods for determining which windows and doors qualify for various tax credits. In 2016 the government is using the Energy Star guidelines to determine which replacement windows and doors qualify.
If your new windows and doors are Energy Star certified then you’ll qualify for the tax credit. Most manufacturers offer many qualifying options.
What are the 2016 Energy Star guidelines?
The guidelines vary based on where you live. This is a pretty reasonable method as folks in Phoenix need different windows than folks in Maine. The exact requirements for your location are shown here and your window installation company should be able to make sure they’re offering you windows that will qualify.
How much is the tax credit?
The tax credit for 2016 is based on the cost of the windows. You’ll be eligible for a federal tax credit of 10% of the cost of the windows, not including labor costs, up to $200.
The tax credit for doors is similar. It’s 10% of the cost of the doors, not including labor, up to $500.
This is only $200?
If you’re one of those people who says, “oh, it’s only $200 well that’s nothing” then please make a check out to me for $200 and drop it in the mail.
I know it would be better if it was $2,000, but c’mon $200 is $200. Go buy your sweetheart something nice and quit your grumbling.
Is this a tax credit or a tax deduction?
This is a tax credit. This means your tax bill will be reduced by $200. There is no consideration for how much you make or how much you pay. If you owed $10,000 in taxes you’ll only owe $9,800 if you spent over $2,000 on qualifying windows.
If you’re owed a tax refund (since starting a business I can barely remember what a tax refund is), your refund will increase by $200. So, if your refund would have been $3,000 it will now be $3,200 if you purchased qualifying windows.
What if I already purchased windows?
If they meet the Energy Star requirements and you’ve purchased them in the last few years you’re eligible for the same credits.
What documents do I need?
You do not need to submit anything with your taxes. You just let them know how much you spent on the windows and you get the credit. It might be a smart idea to keep a copy of your invoice and the manufacturers certification statement in your files just in case you need to prove anything one day.
What if I used this tax credit last year?
If you’ve used a tax credit for any energy efficient home improvement in the past you probably cannot add this credit to that one. You get one shot whether you use it for new windows, a new furnace or one of those fancy tankless hot water heaters (I just got one of those bad boys, endless hot water, I love it).
Should I ask a tax professional if I have questions about this?
Yes. I’m a window person not a tax advisor. This is the best info I have based on my experience. Please don’t email me saying I cost you tax money. Call your tax preparer with any questions.