Welcome To Josh's Blog O' Thoughts: February 2009

Generally speaking, I've always found the energy efficiency federal income tax credits a bit confusing. To my knowledge, there are at least the two different tax credits available to home owners: the Nonbusiness Energy Property Credit and the Residential Energy Efficient Property Credit.


Nonbusiness Energy Property Credit

This tax credit allows you to recoup some of the money you spent to perform energy efficient upgrades to your home. The catch is that it must be an upgrade that is performed and not a new installation. For example, if you have your old windows replaced with new Energy Star windows, you should be able to take a credit, but if you build a new house, you won't be able to take the credit even if the windows used are Energy Star. Other items that are available for credits include insulation, lighting, heating and cooling, water heaters, and windows and doors. Every item has a maximum credit that can be taken. View the Energy Star website for more information.

What makes this credit even more confusing is that the credit expired at the end of 2007, but was then reinstated in October 2008 not to take effect in 2009.

From the 2008 Federal 1040 Booklet:
The credit for nonbusiness energy property has expired and does not apply for 2008. Form 5695 is now used only to claim the residential energy efficient property credit.

This means that you will NOT be able to take this credit for any energy efficient upgrades you made in 2008. So it really won't be usable on this year's tax return, but if you make any upgrades in 2009, you should be able to claim a credit for them when you file next year.


Residential Energy Efficient Property

This tax credit is available for installations of various Energy Star qualified, high-efficiency products. Items covered under this credit include solar energy systems, wind energy systems, fuel cells, and (as of October 2008) geothermal systems. The Emergency Economic Stabilization Act of 2008 that was passed in October 2008 not only reinstated the Nonbusiness Energy Property Credit (see above), but also expanded the Residential Energy Efficient Property credit to include geothermal systems. Even better, this credit can be used for new construction, AND can be taken for products installed in 2008! This is great news for people who installed a geothermal system in 2008.

This credit generally allows you to get back up to 30% of the investment expense in these systems. This year, the credit for each is capped at $2,000, but from what I understand, the cap will be removed starting next year allowing you to take a full 30% credit. This is even better news for people planning on installing a geothermal system in the next 7 years (expires in 2016).

To take the credit on line 53 of your 1040, you also need to file form 5696 with your return. Your total credit from this form may also be limited by your income or by some of the other credits you may be taking. Please review the instructions for more information.


I Am Taking The Credit

If you followed my blog closely, you would have seen that my family built a new home in 2007/2008 with the completion being in Jan 2008. You also would have noticed that we had a geothermal system put in for our heating and cooling solution. Since the house was completed and put into use in 2008, the installation date of the geothermal system is considered to be 2008. Therefore, I can take this credit on my 2008 return. I can get a credit of up to 30% with a cap of $2,000. This means that the total qualified expenses of the product and installation only needed to clear $6,666 to get me the full $2,000 (it easily cleared this mark). And since a tax credit drops straight to the bottom line, I’m happily I’m getting an extra two grand back from Uncle Sam this year.


Reference


Federal Form 1040 Instructions
Federal Form 5696 and Instructions
Energy Star Website
GeoExchange Website
WaterFurnace Website
About.com Energy Tax Credits
Wikipedia Article - Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008

Disclaimer

I am not a tax professional, so this information should not be taken as tax advice. I'm simply stating my understanding of the situation.

Well in the past few days, one of my blog posts has made the distinct honor of being the first to have over 2000 views. Which of my popular posts was it to break this mark?

Was it the Gerber Viper Toilet Demonstration Video which linked to the very informative and sometimes slightly disgusting toilet demostration?

Was it the Tax Reporting For Employee Stock Purchase Plan (ESPP) post helping people figure out how to report gains and losses from their ESPP plans?

Was it the Gerber Allerton Toilet Review which was my own personal review of the Gerber Allerton toilet?

Or was it the The Easy Guide To The Digital TV (DTV) Switchover post which attemps to help people understand the conversion to DTV in layman's terms?


AND THE WINNER IS...

Tax Reporting For Employee Stock Purchase Plan (ESPP)

Granted, I this is a topic of seasonal interest. Last year, it got very high views in Febraruary, March, and early April, but it slumped off during the rest of the year. I assume I'll see the same thing happen this year as tax time comes to an end.

Well I'm not the type of person that just goes out and buys domain names willy-nilly in hopes of selling them to someone with an interest in the name. I only buy a name if I intend to use it.

Pantoozle.com was a project I started with a friend in 2006. It was originally supposed to be a site where people could post classified-type ads (mostly for free). We also built in a database which would allow users to rate and review local businesses.

Initially, the website was a big hit. We had lots of hits in the early days. Unfortunately, very soon after we opened our site, Craigslist.org opened a sub-site for our specific metro area. Craigslist already had a huge following and more or less killed the traffic to our site. Don't get me wrong, I love craigslist and use it myself, it just happened to nullify our little project.

So anyway, I've been holding on to this website for a while, but with no activity in the past year and half, I've decided to bring it down. I removed all the content and I am putting the domain name, Pantoozle.com up for sale.

So if anyone is interested in a kooky domain name that could be used for nearly any type of web site, contact me here: BreitTechnologies.com

Make an offer!

If you haven’t heard about the transition to Digital Television (DTV) by now, you've been living under a rock for the past couple years. My previous article, The Easy Guide To The Digital TV (DTV) Switchover explains what the transition is all about. If you are unsure about what the transition is, or how it affects you, you need to read that article.

Previously, the FCC and congress had mandated that all analog TV transmissions cease on February 17, 2009. At that point, people who were receiving analog transmissions over the air and had not appropriately prepared for the transition would lose television service. The hard cutoff date had also forced TV stations to prepare for the transition as well.

However, a bill recently passed (February 4, 2009) by both the Senate and the House will push the hard cutoff date back to June 12, 2009. The bill is currently awaiting the President's signature, but since he introduced the bill, it's almost certain that he will sign it. The thought process behind the bill is that the additional time will allow the remaining people to become prepared for the transition. Well I've got news for them: it's not going to work.

The Nielsen group estimates that there are still over 6 million people watching analog TV. Will this additional time get these people prepared? Probably a few, but in the end, it doesn't matter what date you pick for the cutoff, there are going to be people that are just not prepared. To be honest, with all the warning messages circulating around, if these people haven't prepared by now, they probably don't plan on becoming prepared by June either. Maybe they don't watch that much TV or they just don't care. Doesn't really matter what the reason is, there will still be lots of people unprepared in June.

You might be thinking: "This is great! I'm not prepared yet and now I have an extension!" Wrong! While the new bill does delay the hard cutoff date to June 12, the revised version of the bill (the version that passed) includes a provision stating that any local broadcaster that is fully prepared for the transition may shut down their analog signal BEFORE June 12! I can't imagine that there are many stations that aren't prepared already since they have been operating under the assumption that February 17 was the cutoff date. That said, I would imagine that a LOT of these stations would choose to cease their analog transmissions at the original cutoff date of February 17 to avoid the operating expense of transmitting two signals. I know all of my local stations are still switching on February 17.

So congress and the FCC have been saying for well over a year that the hard cutoff date is February 17, 2009. They have hammered that date into our skulls so many times with the onscreen messages and infomercial-like TV spots. And now, just 11 days from the transition date, there's a bill passed that states the DTV transition date has been pushed back to June 12, 2009. Undoubtedly, this will get media coverage. However, I doubt that the fact that individual stations have the choice to cut over early will get the coverage it needs. So come February 18, you might find yourself without TV when you thought you had until June 12.

And we thought it was confusing for people before! Way to go law makers!