Homeowners that change their old, drafty windows can not only take advantage of the great sale we have going on right now, they can also enjoy the tax deductions for them next year. Tax deductions are available for both federal taxes, as well as Kentucky taxes and can be claimed on both taxes during the same year to help you save as much money as you can during tax season.
Federal Tax Deductions for Energy-efficient Windows
We have already talked quite a bit about the federal tax deductions for 2013, but in case you missed it here it is again:
The “Fiscal Cliff” bill (also known as the American Taxpayer Relief Act of 2012) that passed on New Year’s Day extended the Energy Efficiency Tax Incentive from 2012. This means that you can get a credit on your taxes next year for installing energy saving replacement windows this year. The credit is for 10% of how much you pay for the windows, up to a maximum credit of $500.
To qualify for this tax deduction, the windows have to have a Manufacturer Certification Statement. This statement comes from the manufacturer and verifies that the window qualifies for the tax credit. The windows also have to be installed by December 31, 2013 to qualify for this year’s tax deduction.
If you installed energy-efficient windows last year, don’t forget to take that deduction while you are working on your taxes this year.
Kentucky State Tax Deduction
The state of Kentucky also allows residents a personal tax credit on their state taxes. The maximum is lower than the federal tax deduction at $250 for windows alone, but it allows a higher percentage than the federal credit.
Kentucky allows 30% of the installed cost of the windows to be deducted, so this means that homeowners will max out the credit faster. However, this works out better for homeowners whose cost for their new energy-efficient windows are less than the $5000 cost that is required to max out the federal deduction.
The credit can also be used on storm doors.
To claim the Kentucky credit Form 5695-K – Kentucky Energy Efficiency Products Tax Credit – Form 41A720-S7 has to be used when you file your taxes. We would be more than happy to answer any questions you may have about this state tax credit, or you can also contact the Kentucky Department of Revenue.