The Internal Revenue Service (IRS) has now released a frequently asked questions (FAQ) list to help guide consumers through two of the biggest changes this year: energy efficient home improvements and residential clean energy property credits.
The agency explained that following the passing of the Inflation Reduction Act, many of the tax credits, credit limitations, and eligible expenditures have changed since consumers last filed taxes.
What to expect
While the new FAQ breaks down the changes related to energy-efficient home improvements and clean energy property credits, the document first provides this general overview of the Residential Clean Energy Property Credit:
“The residential clean energy property credit is a 30% credit for certain qualified expenditures made by a taxpayer for residential energy efficient property. The IRA extended the residential clean energy property credit through 2034, modified the applicable credit percentage rates, and added battery storage technology as an eligible expenditure. The credit applies for property placed in service after December 31, 2021, and before January 1, 2023. The credit percentage rate phases down to 26% for property placed in service in 2033, 22% for property placed in service in 2034, and no credit available for property placed in service after December 31, 2034.”
From there, users can explore the document in-depth to learn more about:
Energy Efficient Home Improvement Credit: Qualifying Expenditures and Credit Amount
Residential Clean Energy Property Credit: Qualifying Expenditures and Credit Amount
Energy Efficiency Requirements
Qualifying Residence
Labor Costs
Timing of Credits
General Questions
Examples
Deeper dive
Each section dives deeper into these topics to help consumers get detailed insights into what to expect when filing taxes. This includes:
- Which home improvements are eligible for the Energy Efficient Home Improvement Credit
- What residential clean energy expenditures are eligible for a Residential Clean Energy Property Credit
- What energy efficiency requirements must be met to qualify for the Energy Efficient Home Improvement Credit, what type of residence qualifies for the credit
- Whether existing homes are eligible for the credit
- Whether residences used as businesses are eligible for the credit
- Whether taxpayers can include the cost of labor, and more.
The IRS utilizes FAQs as a way to quickly share new information with taxpayers that is widely asked about and applicable throughout tax season. While these documents are subject to change, they serve to be beneficial guides for consumers.
To access the full FAQ on energy efficiency home improvements and clean energy credits, click here.