Len The Plumber is here to bring some joy to our customers during the stressful tax season.
On January 2, President Obama signed legislation designed to avoid the “fiscal cliff” and to prevent tax rates from increasing for tax paying Americans. The good news for our customers is that 25C tax credits for highly efficient water heating equipment that expired at the end of 2011 has been reinstated as part of this legislation.
What does this mean for you? Specifically, the bill extends the tax credits that expired in 2011. They are now extended from January 1, 2012, until December 31, 2013, for qualified equipment listed in Section 25C of the Internal Revenue Code. Because the credits were made retroactive to January 1, 2012, they can be used for qualified equipment that was installed any time after December 31, 2011.
This is great news for you IF you had a new water heater or boiler installed in 2012 OR if you are considering an installation in 2013. Here is what you need to know to find out if you qualify:
1. Gas Tankless Water Heaters ($300)
- With an energy factor of .82 or higher.
2. Water Heaters ($300)
- Electric heat pump water heaters with an energy factor of at least 2.0.
- Natural gas, propane, or oil water heater with an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent
3. Boilers ($150)
- Natural gas, propane, or oil boiler with an (Annual Fuel Utilization Efficiency) AFUE of not less than 95.
You can find your energy factor on the actual unit of your water heater on the plate that provides all of the information about your unit. The AFUE for boilers can be found on the energy savings sticker on the unit.
Now that you know what the requirements are, here’s what you need to do to claim the credit.
1. First you’ll need to download and save the 2012 Manufacturer’s Certification Statement which can be found on the manufacturer’s websites. Here’s an example for Rinnai water heaters at http://www.rinnai.us/tankless-tax-credit.
2. You will need to have a copy of your receipt signifying proof of purchase.
3. You need an IRS Form 5695.
You can learn more in the “Tax Credits for Energy Efficiency” section at www.energystar.gov.