home energy credit

[Morgan48]

If I used a home warranty to pay for a new AC unit and paid extra on top of what the warranty covered, how much of the cost can I receive a credit for? The amount I paid in addition what the home warranty paid was under $500. 

[Jackstar221]

Hi,

Make sure that the manufacturer or provider of the unit confirms that the AC qualifies for the credit. The maximum credit for all AC units is at $600 per year, and the maximum credit for all energy-efficient improvements is $2,000 per year. The credit is determined by the amount you spent out-of-pocket, not the amount you had coverage for with the home warranty.

Please make sure to keep all receipts of the purchase and labor done to install the product.

To report in TurboTax: Go to deductions and credits, within the home section go to home energy credits. Then enter the amount paid out of pocket for the AC unit. It may be possible to claim that $500 as a credit, as long as the AC unit has the energy efficiency requirements.

Here is a TurboTax article, and other links within it, that discuss home energy tax credits: TurboTax Home Energy Credits 

[Terri Lynn]

Hello, Morgan48 and thank you for joining us!

Since you used a  home warranty to help cover the cost of your AC unit, you will have to subtract the amout  the warranty covered from the total cost paid for the unit, before calculating your Home Energy Efficiency Improvement Credit.   Some important things to consider when calculating the credit for the AC are:

• The maximum credit for all AC is $600.   The overall Home Energy Efficiency Improvement Credit is generally limited to $1,200 for all eligible items, except for bio mass boilers and furnaces, which allow you to claim up to an additional $2,000 for the Home Energy Efficiency Improvement Credit.  
• This is a non-efundable credit. and it does not carry forward to be used later on, unlike the Residential Clean Energy Property Credit, which does.

For additional information on energy credits see:

• Home Energy credit IRS FAQ 
• Energy Tax Credit: Which Home Improvements Qualify? 
• What Are Energy Tax Credits? - TurboTax Tax Tips & Videos 

Please feel free to reach backout with any additional questions or concerns you might have!

Have an amazing rest of your day!

Terri Lynn, EA

 *Please say "Thanks," by clicking the thumbs up icon at the bottom of the post.
**Select the post that answers your question by clicking on "Mark as Best Answer.”