Last chance for expiring tax credits
A 1040 tax form
TEXT OF INTERVIEW
Tess Vigeland: A couple of years ago, Congress gave tax credits to folks who made their homes more energy efficient, but all good things must come to an end.
And now, if you were planning, say, new windows? Well, you've got a window of about three weeks before those credits expire.
Andrea Coombes writes for Dow Jones MarketWatch.com
Vigeland: Andrea, those windows I mentioned... that's one of the potential tax savings until December 31?
Andrea Coombes: Exterior windows is one improvement you can make to your home. You have to get the high quality, energy efficient window; if you install those, you can get a tax credit back. Now, this the IRS and nothing's all that simple anymore -- or maybe it never was -- but the maximum credit for windows is $200, but that is the total dollar credit you'll get back. If you spend $200, you're only going to get 10 percent of that as a credit. So it's 10 percent of whatever you spend, up to a maximum of $200. Another one is for furnaces and boilers. If you install an approved, energy efficient furnace or boiler, you can get a credit up to $150.
Vigeland: Alright, so we mentioned windows and furnaces. What about, for example, solar panels? That's been a big thing this year that people are talking about getting done.
Coombes: That's true and obviously, it's a big boon to your energy bill and yes, there is quite a valuable credit, up to $2,000 available for installing approved solar panels. Of course, the cost is high -- it's many thousands of dollars. In your area, you should look around. Some cities are offering aid to homeowners who want to install solar and there are also situations where homeowners are getting together and getting a bulk rate, a discounted rate from solar panel installers if a number of homeowners do it at once. And with energy efficiency overall, don't focus only on the federal tax credits available. There are many, many state programs and the good news there is a lot of the state credits aren't expiring this year so you might be able to get something next year if you're not ready to do this kind of major renovation in the next three weeks or so.
Vigeland: Well, we've gone through what's going on with the energy credits. Are there any other tax breaks that are set to expire at the end of this year?
Coombes: There are. These include things like the deduction for teachers who pay for classroom materials out of pocket -- it's up to a $250 deduction. Also, there's an option right now where you can choose to deduct either your state income tax or state and local sales tax. It's more of an issue for people in states with no income tax; tends to be a good perk for them, very valuable perk for the people in those states. We're still waiting to see whether that will be extended into 2008. Another one is this option to donate up to $100,000 out of your IRA tax-free. That's available to older people, people 70 and a half or older can donated up to $100,000 out of their IRA income tax-free to a charity. That expires at the end of 2007 as well and we don't know whether that will be extended.
Vigeland: Andrea Coombes is a personal finance writer with MarketWatch. Thanks so much for your help.
Coombes: Thank you, Tess.