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Income Tax Credit for Energy Efficient Replacement Windows Increased, Qualifying Criteria Tightened

The federal income tax credit for energy-efficient replacement glass windows and doors is now 30 percent of product cost up to $1,500 per household, an increase from $500 two years ago. The new energy-efficiency tax credit on replacement windows is available in both 2009 and 2010 according to the economic stimulus bill signed by President Barack Obama Feb. 17.

Unlike tax credits for energy-efficient windows and doors in prior years, the “30/30†criteria is stricter than the government’s Energy Star rating program. Not all Energy Star labeled windows and doors will qualify for the new tax credit.

To take advantage of the tax credit, you must make sure the energy-efficient replacement glass windows and doors meet or exceed the “30/30†criteria to qualify. Here’s what to do:

1.    Look for the manufacturer’s labels on the glass window product packaging. Save them for documentation.

The manufacturer’s labels should show that the qualifying replacement glass windows meet or exceed U-factor and Solar Heat Gain Coefficient (SHGC) ratings, also called the “30/30†criteria. In other words, the U-factor rating must be .30 or less and the SHGC must be .30 or less.

The U-factor rating measures the passage of heat through the glass. Windows with lower U-factor ratings are more energy efficient. The SHGC rating measures the percentage of heat in the room gained from absorbed heat and direct sunlight. Windows with lower SHGC ratings reduce the solar heat gain in the house. It adds up to lower energy costs for your home, which saves you money on your electricity and/or natural gas bills.

2.    Select the right replacement windows for your home that will qualify for the tax credit.

The most energy-efficient replacement windows on the market are triple-pane replacement windows with argon gas insulation (commonly called Insulated Glass Units or IGUs). These windows are eligible for the tax credits and will reduce your energy costs the most.

Single-pane replacement windows are not eligible for the energy-efficient tax credit because glass by itself is not an insulator. The U-factor and SHGC ratings will be too high.

Most double-pane replacement windows with low-E coating or gas insulation probably will qualify. You should insist on checking for the Energy Star label as well as the U-factor and SHGC ratings on the replacement window manufacturer’s labels before allowing the windows to be installed. Remember, not all Energy Star double-pane windows qualify for the tax credit, but if the product does not have an Energy Star label at all it definitely will not qualify. If you have a question about whether or not the double-pane windows qualify, a Glass Doctor installer will be glad to help you contact the window manufacturer directly.

Glass Doctor is working with its replacement window suppliers to offer high-quality, energy-efficient window products with the Energy Star seal that qualify for the tax credit. MI Windows and Doors has developed a special line of double-pane windows for Glass Doctor. With next generation warm-edge spacer technology, the ETC30 glass package includes high performance low-E coatings and argon insulation enhancement.

3.    Save the manufacturer’s labels and documentation for the special form to be submitted with your tax return.

To receive the tax credit, you will have to submit an IRS Form 5695 with a receipt for the replacement window purchase and the window manufacturer labels and stickers. A tax credit reduces the amount a taxpayer owes the government in taxes; it does not reduce the amount of income on which the taxpayer owes taxes.

The federal energy efficiency tax credit is allowed on the cost of the actual replacement window product that qualifies. The tax credit is not allowed on installation services, onsite preparation, assembly, or state sales taxes. Windows for new homes do not qualify for the tax credit, no matter what type of window is installed.

If you have any questions about energy-efficient replacement windows and glass doors, contact your local Glass Doctor. If you have questions about the tax credit, be sure to contact your tax planner or accountant. We can fix your panes, but we can’t fix your tax returns if you’re audited.

Taxpayers should consult their tax planners or accountants and review all IRS guidelines. Glass Doctor is not a tax advisor. The above is a partial summary of the revisions to the federal tax code (U.S. Code Title 26, Section 25C) as updated by the American Recovery and Reinvestment  Act of 2009. Taxpayers should check with the IRS regarding updates to the IRS interim guidance in Notice 2006-26 for further details on the tax credit. Other energy efficient improvements may apply; check the following link and the IRS website for more details at at http://www.irs.gov/newsroom/article/0,,id=97322,00.html. Glass Doctor bears no responsibility in the validation of obtaining the tax credit. Please consult with a professional tax advisor or the IRS. Glass Doctor expressly disclaims any responsibility for determining whether a particular product qualifies for the tax credit.

 

About the Author

About Glass Doctor®:
Glass Doctor is the largest chain of full-service glass franchises in the nation. From windows to windshields to storefronts, Glass Doctor can handle any glass need. Glass Doctor also offers custom glass services, such as tub and shower enclosures, entry door glass and mirrors. Established in 1962 with one shop in Seattle, Wash., today Glass Doctor offers complete glass repair, replacement and services to the residential, automotive, and commercial markets at more than 375 locations in the United States. Glass Doctor began franchising in 1977 and joined The Dwyer Group, Inc., an international franchisor of service industry companies, in 1998. There are more than 165 Glass Doctor franchise owners across the United States and Canada. For further information or to find the location nearest you, visit www.glassdoctor.com.

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