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How much energy does your home consume? This is a question that most Americans don't know the answer to and it remains a concern for us. The government has announced a new Home Energy Audit Tax Credit, which allows you to receive up to 30% of the amount you invest in this service. Before you get started, do you know why you need it? Don't worry, we'll explain too.
Government announces new home energy audit tax credit: here's the new program
The Home Energy Audit Tax Credit is a federal tax credit that homeowners can claim up to 30% of the cost of a qualified home energy audit, up to a maximum of $150. This tax credit was extended retroactively through 2021 by the Consolidated Appropriations Act, 2021.
The purpose of this credit is to encourage homeowners to evaluate the energy efficiency of their homes and identify areas for improvement. A professional home energy audit will inspect your home and evaluate your insulation, air leaks, heating and cooling systems, lighting, appliances, and more.
The audit will provide you with a detailed report with recommendations for updates and improvements that will help you reduce energy waste and your utility bills. As you may know, a home energy audit involves an assessor thoroughly inspecting and analyzing your home to evaluate where energy is being lost and how you can conserve it.
By completing an audit and making energy-efficient upgrades, homeowners can reduce their environmental impact while creating a more comfortable home. The tax credit helps to reduce the cost of the audit, further encouraging homeowners to take that important first step toward efficiency.
Requirements confirmed by the government: Here's what you should do
To qualify for the Home Energy Audit Tax Credit, an audit must meet certain requirements set by the IRS: The audit must be performed by a qualified individual, follow established procedures, and provide actionable recommendations to improve the energy efficiency of your home.
Conducted by a Qualified Assessor: Audits must be completed by certified, trained individuals who meet the qualifications set forth by the IRS.
Follow established procedures: Assessors must follow RESNET's current Standard Work Specification or an equivalent standard.
Provide a written report: You should receive a written report from the assessor that provides recommendations for improving the energy efficiency of your home.
Dates after December 31, 2020: To be eligible for the tax credit, the audit must be conducted on or after December 31, 2020. Audits conducted before this date are not eligible.
Here's how to get the Home Energy Audit Tax Credit: EPA Verified
To claim the home energy audit tax credit, you must attach IRS Form 5695 to your tax return for the year the audit was conducted. The credit can be claimed for the tax year the audit was conducted. For example, if you had an audit conducted in 2022, you would claim the credit in 2023 when you file your 2022 taxes.
Your deduction is limited to 30% of the cost of the home energy audit, up to $150. So if your audit costs are $500, your deduction is up to $150. If your audit costs are $300, your deduction is 30% of $300, or $90. When you file Form 5695, you must provide receipts showing your home energy audit costs.
The receipt should clearly state what services were provided for the fee, such as “Home Energy Audit.” Be sure to keep the receipt from the qualified adjuster who completed the audit. The IRS will require documentation that you paid for a qualified home energy audit during the tax year.
In fact, having looked at most of the renewable energy subsidies, we think the Home Energy Audit Tax Credit is one of the most substantial. This service is ideal for managing not only your energy spending but also your energy sources, and improving the adoption of renewable energy in residential areas is one of the goals of EPA funding.
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