The credit for energy efficient home improvements can be claimed for qualifying energy efficient items including insulation systems, windows, furnaces, and solar panels placed into service after December 31, 2005, and before January 1, 2008.

The Energy Act provides a credit for individuals who make improvements to their homes that are energy efficient. Individuals may claim a credit of ten percent of the cost of purchasing insulation systems that reduce heat gain or loss, exterior windows (including skylights), exterior doors and metal roofs that meet Energy Star requirements. The maximum credit for all taxable years is $500. However, no more than $200 of the credit can be attributable to expenses for windows.

The following items are eligible for the credit:

• $50 credit for each advanced main air circulating fan;
• $150 credit for each qualified natural gas, propane or oil furnace or hot water heater; and
• $300 credit for each item of qualified energy efficient property.

Through the end of 2008, an additional credit is available for the addition of qualified solar panels, solar water-heating equipment or a qualified fuel cell power plant. The credit for solar panels is 30 percent of the cost, but no more than $2,000. However, no credit is allowed for systems used to heat a pool or hot tub.

Now, start improving those homes before it snows (or the 2007 tax year ends)!

Tax Guide 2008

Net Operating Losses
Many small businesses continue to suffer major losses due to natural disasters and related damages. Although it may be small comfort, sole proprietors will normally be able to deduct the loss from their total income from other business ventures or from any salary, wages, or other earnings.

If the business loss exceeds the total income for the year, any unused portion of the loss, which is known in the tax laws as a net operating loss (NOL), can be used to offset income and reduce taxes in another year. This may result in an immediate source of cash to help with recovery.   For more details, please review Net Operating Losses.

Casualty and Theft Losses
If you've suffered the results of a theft, accident, fire, flood, or some other casualty during the year, you may be able to deduct some of your unreimbursed losses.   For further details, please read Casualty and Theft Losses.

Home Office Casualty Losses
If you qualify for the home office deduction and your home office is damaged or destroyed by a burglary or a disaster such as a hurricane, flood, fire, accident, riot, or vandalism, you may be able to deduct some of your losses as part of the home office deduction.   For more on this topic, please review Home Office Casualty Losses.

Reporting a Casualty Loss
If you have a loss to personal-use property, you must fill out Section A of Form 4684, Casualties and Thefts. Each item is reported in a separate column on this form (if a large number of items were lost or damaged, you can use reasonable categories such as "clothing," "jewelry," "furniture," etc.).   To continue learning more, please read Reporting a Casualty Loss.

Tax News

Restricted Mortgage Interest Deduction

Under the banner of global warming legislation, the federal government may try to penalize you if you own a home considered too big by some lawmakers. Owners of homes measuring more than 3,000 square feet could lose their mortgage interest tax deduction under a bill being drafted by the energy and commerce committee chairman in the House of Representatives.   For further details, please read Congress to Consider Eliminating Mortgage Interest Deduction on Larger Homes.

2008 Tax Brackets Projected

The indexing of many features of the tax code will bring some relief to taxpayers next year, according to CCH Tax and Accounting, a leading provider of tax law information, software and services. The company recently released estimated income ranges for each 2008 tax bracket, as well as other inflation adjusted tax figures.   To find out where you will come out, please read Tax Rate Projections for 2008.

401(k) Fee Structures Examined

For many workers, participating in a 401(k) account is the biggest piece of a retirement savings plan (as well as the easiest way to lower taxable earnings). Because of their popularity and importance, these savings vehicles are highly regulated by lawmakers and the government. And one aspect of the plans is receiving renewed attention from Congress because of its effect on the value of your 401(k) plan--the service fees.   For more information on this important topic, please read Congress Probes Fee Structures of 401(k) Retirement Plans.

Closing the Tax Gap

The Treasury Department and the IRS announced on August 2, 2007, a comprehensive multi-year timeframe for taking action to reduce the $300 billion tax gap--the difference between what taxpayers owe and what they actually pay.   For further details, please read Feds Unveil Comprehensive Plan to Close $300 Billion Tax Gap; More Audits for Small Business Owners.


Tax News Archive

For more stories and features on federal, state and payroll tax issues and how they may affect you, read the listing of articles in the archive.

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