The federal government provides incentives to homeowners who make energy efficiency improvements in a primary residence. If you replace windows and doors, you may receive federal tax credits to offset a portion of your expense as long as you navigate through some key points.
Choose Qualifying Windows
Select windows that qualify for the federal tax credit. Visit the Energy Star website to learn the U-factor and solar heat gain coefficient ratings for your geographical location. Enter your state and county into the search tool to learn the minimum ratings required for windows in order to receive a tax credit. After learning the minimum ratings, check the National Fenestration Rating Council label on any windows you consider to ensure that the windows you purchase meet minimum rating requirements.
Save your purchase receipt that indicates the price of the qualifying windows. You will not receive a tax credit for installation charges -- only product prices qualify for the tax credit. Save the NFRC labels from the windows also. File these labels in your tax documents to enable you to document your windows' ratings in the event of a future audit.
The IRS institutes a lifetime limitation on energy credit claims. If you have received energy credits between 2006 and 2010 for energy efficiency improvements totaling $500 or more and $200 of the total improvements were for windows, you cannot receive a window tax credit (as of 2012). You must install the qualifying windows between Jan. 1 and Dec. 31 of the applicable year for which you are filing taxes.
Complete IRS Form 5695 Part 1 to detail the windows you purchased and installed. Part II of Form 5695 pertains to qualified geothermal heat pumps, solar energy systems and residential wind turbines. If you had window tax credits from previous years, use the window expense worksheet on page 5 to determine the figure to enter on line 3f of Form 5695 Part 1. Submit the form with your income tax Form 1040.
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