ROTH CPA & ASSOCIATES, LLC

10751 Montgomery Road

Cincinnati, OH 45242

513-530-9000

¨ Energy Tax Breaks

§ Home Improvements

             Home improvement tax credits are available for home improvements              placed in service from January 1, 2009 through December 31, 2009.              Any qualified home improvements made in 2008 are not eligible for                    the tax credit.

 

             Home improvement tax credits are available for insulation,

             replacement windows, non-solar water heaters, and certain high-

             efficiency heating and cooling equipment. The maximum amount

             that a taxpayer may claim from all of these tax credits is $500 over

             the lifetime of the tax credit (2006, 2007, & 2009).

 

§ Efficient Cars

      Starting January 1, 2009, there is a new tax credit for Plug-in

      hybrid electric vehicles, starting at $2,500 and capped at $7,500 for

      cars and trucks (the credit is based on the capacity of the battery

      system). The first 250,000 vehicles sold get the full tax credit

      (then it phases out like the hybrid vehicle tax credits). Tax credits

      are available to buyers of hybrid gasoline-electric, diesel, battery-

      electric, alternative fuel, and fuel cell vehicles. The tax credit amount

      is based on a formula determined by vehicle weight, technology,

      and fuel economy compared to base year models. These credits

      are available for vehicles placed in service starting January 1, 2006.

      For hybrid and diesel vehicles made by each manufacturer, the credit

      will be phased out over 15 months starting after that manufacturer

      has sold 60,000 eligible vehicles.

 

§ Solar Energy Systems

     Tax credits are available for qualified solar water heating and

      photovoltaic systems. The credits are available for systems placed

      in service from January 1, 2006 through December 31, 2016. The

      tax credit is for 30% of the cost of the system, up to $2,000. After

      December 31, 2008, this $2,000 cap will be removed for photovoltaic

      systems (but not solar water heaters). This credit is completely

      separate from the $500 home improvement credit.

 

§ Small Wind Energy Systems

      Tax credits are available to homeowners who install residential small

      wind turbine systems. The credits are available for systems placed in

      service from January 1, 2008 to December 31, 2016. The tax credit

      is for 30% of the cost of the system, up to $500 for each half kilowatt

      capacity with an overall maximum of $4,000.

 

¨ New Rules for Charitable Contributions

           Beginning in 2007, a donor must be able to show proof of a            donation to take a deduction for any monetary charitable gift. A            cancelled check, credit card statement or receipt from the

           charity will satisfy the documentation requirement. A law passed            in 2006 allows a deduction for the donation of clothes or                       household items only if they are in “good” used condition.                     However, the law did not define the term “good.” Be sure to get a            receipt from the charity and take pictures of the items to                      substantiate the deduction. An exception to this rule exists for a            single donated item appraised at more than $500, as long as a              qualified appraisal is included with the donor’s tax return.

           Starting in 2008, IRA owners who direct that all or part of

           their IRAs be given to charity once again have to report the

           withdrawal as income and deduct the donation as a charitable

           contribution. As a result, their deductions may be limited by

           the adjusted gross income cap on charitable contributions and

           the itemized deduction phaseout. Fortunately, Congress is

           likely to eliminate this potential roadblock for 2008 returns.

 

¨ Expanded Exemption on AMT

           Finally, late in 2007 Congress passed a one-year patch for                    Alternative Minimum Tax (AMT) relief in the form of an expanded            exemption. As the AMT defies most traditional tax saving                      strategies, it is best to consult with us to find out how it may                 affect you. We understand the business of taxes and finances and            can review your overall financial picture to help you find winning            tax strategies.

 

 

 

Recent Tax Law Changes